Global Growth Concerns Weigh Broadly

By: Barbara Zigah

As Tokyo-based importers took advantage of the earlier rally, the Japanese Yen saw some slight weakening during the Asian trading session but the newly raised concerns over global growth are likely to send investors back to safe haven currencies. Risk currencies, such as the Australian Dollar, look set to end this week sharply lower as new concerns about the global economy recovery come to the fore in light of dismal PMI manufacturing data from China, Germany, France and the broader based Eurozone. In China, the PMI figures contracted for the fifth consecutive month, and in Germany and France, the declines in the PMI readings were large and unexpected. As reported at 1:38 p.m. (JST), the Japanese Yen fell 0.3% against the U.S. Dollar, to trade at 82.75 Yen, and is moving back toward the 2012 low which was struck earlier this month.

Compounding the problems in the Eurozone, the latest Spanish bond auction had less than spectacular results, with yields spiking above 5.5% and approaching those struck in early January. The rise was not unexpected however, as the Spanish government recently said they would not meet the agreed to budget deficit. The resilient Euro bounced off an earlier low of $1.3133 to recover most recently at $1.3203. Analysts expect that the U.S. economic recovery will help provide support for the U.S. Dollar in the medium term.