* Flash HSBC PMI for China points to tepid Q2 recovery
* Aussie hits six-week low; yen rises broadly
* Stop-loss dollar selling adds to dollar/yen’s drop
By Masayuki Kitano
SINGAPORE, April 23 (Reuters) – The yen rose broadly and the
Australian dollar hit a six-week low on Tuesday as a weak
reading on the Chinese manufacturing sector stirred worries
about the health of the global economy.
The Australian dollar touched $1.0221, its lowest
level since March 11, and last changed hands at $1.0234, down
0.3 percent from late U.S. trade.
Growth in China’s vast factory sector dipped in April as new
export orders shrank, according to the flash HSBC Purchasing
Managers’ Index — a preliminary survey of factory managers,
suggesting the world’s No.2 economy still faces formidable
global headwinds in the second quarter.
The gauge of manufacturing in China, Australia’s biggest
export market, triggered a renewed fall in the Aussie dollar,
which only last week had suffered its biggest weekly percentage
drop in nearly a year, hit by concerns about Chinese growth and
a rout in commodity prices.
Against the yen, the Australian dollar slid 0.9 percent to
100.98.
The yen rose broadly, with the U.S. dollar falling 0.6
percent to about 98.71 yen.
The dollar’s drop versus the yen gained momentum after
triggering some stop-loss dollar offers, said Jeffrey Halley, FX
trader for Saxo Capital Markets in Singapore.
In addition, Japanese names and some short-term traders were
spotted selling cross/yen pairs during Tuesday’s Asian trade,
Halley said.
The dollar scaled a four-year high of 99.95 yen earlier this
month, as yen fell after the Bank of Japan’s unveiled its
sweeping monetary stimulus programme.
That marked a dollar rise of about 25 percent versus the yen
since mid-November, when Shinzo Abe, who became Prime Minister
in December, promised bold monetary and fiscal expansionary
policies during his election campaign.
A focal point for the yen now is whether the BOJ’s
aggressive monetary easing will prompt Japanese investors to
increase their purchases of higher-yielding overseas assets, and
how actively they will invest in foreign bonds without hedging
against currency risk.
JAPANESE CAPITAL FLOWS
Japanese capital flows data, however, contains no sign so
far that the BOJ’s drastic stimulus has triggered any Japanese
investor rush into overseas assets. Instead, they have
repatriated money back home in the first two weeks of April.
The yen could take its cues from the next batch of Japanese
capital flows data due later this week, said Rob Ryan,
Singapore-based FX strategist for RBS.
“Are we getting to the stage where people would like to see
some support from the Japanese (investor) community? We’re not
seeing it yet,” Ryan said.
If the data shows even modest outflows, that might be enough
to keep alive expectations for more significant capital outflows
down the road, he said, but added that there was also the risk
of disappointment.
Japan’s biggest life insurer Nippon Life Insurance Co had
said on Monday that it plans to slow its increase in domestic
bond investment in the current fiscal year to March 2014, but
plans to raise unhedged foreign bond holdings at an appropriate
time this fiscal year.
With Japanese interest rates staying low, Nippon Life would
consider buying more foreign bonds without hedges when there are
chances for bargains, a senior official for Nippon Life said,
adding that the life insurer was cautious about current levels
of the yen after its rapid fall over the past several months.
The euro sagged 0.2 percent to about $1.3041, staying
within its $1.30 to $1.32 range of the past couple of weeks.
Keeping a lid on the euro were comments from European
Central Bank policymakers that suggested the bank may be leaning
towards a cut in interest rates.
Source Article from http://www.reuters.com/article/2013/04/23/markets-forex-idUSL3N0DA0X920130423
