Dollar rises against yen on solid Chinese data

By Wanfeng Zhou

NEW YORK (BestGrowthStock) – The U.S. dollar rose against the yen and commodity bloc currencies also gained on Friday as strong Chinese trade data bolstered optimism about the global economic recovery.

China’s imports leaped in August, boding well for a strengthening of domestic demand in an economy that has become a major driver of global growth.

That helped lift stock and commodity prices and diminish safe-haven demand for the yen and Swiss franc. The Australian dollar climbed on expectations solid Chinese growth would boost appetite for the country’s exports.

“Risk aversion has subsided a little bit as a result of the positive import data out of China overnight. That has revived a little bit of hope that China can in fact contribute more sustain ably to a global recovery,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

In late trading, the dollar rose 0.4 percent to 84.15 yen, after rising to a session high of 84.38 yen, according to Reuters data.

A jump in U.S. bond yields to their highest in about a month also helped boost dollar/yen.

Despite Friday’s gains, the dollar remained near recent 15-year lows touched this week, keeping prospects for yen intervention alive.

The dollar rose 0.4 percent to 1.0190 Swiss francs while the euro was up 0.6 percent at 1.2950 francs, after hitting the day’s high of 1.3074 francs, according to Reuters data.

Resistance on euro/Swiss franc is seen around 1.3085. Traders cited Swiss banks selling the franc against the euro, dollar and other currencies.

The euro rose 0.1 percent to $1.2706, near the day’s high of $1.2747. It gained 0.5 percent to 106.96 yen.

Strategists remained cautious about the euro, given the euro zone periphery’s debt worries and renewed concern this week about the region’s banking sector.

European Central Bank Executive Board member Lorenzo Bini Smaghi warned on Friday of a looming debt crunch in several developed countries that could cripple economies if left unchecked.

YEN WATCH

The dollar traded in a tight range between 83.76 and 84.38 yen. Stop-loss orders were reported at 83.70 and 83.75 yen.

The dollar hit a 15-year low of 83.34 yen on electronic trading platform EBS this week, intensifying speculation Japan might step in to curb the yen’s strength if dollar/yen accelerates toward 80 yen.

Japanese Prime Minister Naoto Kan on Friday reiterated that Japanese authorities would take decisive steps on the yen if needed. Joint intervention in currency markets, however, would be difficult, he said.

Investor attention is turning to a ruling party leadership race between Kan and power broker Ichiro Ozawa.

Strategists at BNP Paribas in a note said Ozawa seems less concerned about maintaining U.S. diplomatic ties and hence may be more willing to attempt unilateral intervention.

“While this may be ineffective, these ideas may influence the yen in the short term. An “at the margin” Kan reelection should see yen strength unfettered,” they wrote.

Commodity bloc currencies rose against the U.S. currency. The Australian dollar was up 0.4 percent and the New Zealand dollar rose 0.5 percent.

The Canadian dollar earlier jumped to a three-week high against the U.S. dollar after data showed Canada’s economy added more jobs than expected in August. But it turned lower as details of the report showed the pace of employment creation slowed from the first half of the year.

(Additional reporting by Nick Olivari; Editing by James Dalgleish)

Dollar rises against yen on solid Chinese data