USD/JPY slips as Nikkei falls in risk-off market after disappointing China PMI data
6 January, 2014
The first full trading week of 2014 began today, with Japan opening for the first time after a two-week holiday.
The Nikkei traded down in a risk-off environment as yen was lifted by safe-haven demand. Disappointing China services PMI data weighed on investor sentiment.
The world’s second largest economy showed signs of sluggishness after the HSBC/ Markit PMI for the service sector recorded the weakest level in over two years.
While still in the expansionary zone (above 50 points), the services PMI slipped to 50.9 in December, the weakest since August 2011, compared to a previous 52.5.
As a result, the USDJPY pair was heavy, plunging from a high of 104.95 to lows of 104.15 yen, losing half a percent in the Asian session. The main driver for the dollar this week will be Friday’s US jobs data (nonfarm payrolls).
The euro was also affected, with EURJPY being sold off to 142.65 from 141.50 yen.
Meanwhile, the EURUSD was pinned down against the US dollar, although little changed in the session, edging slightly lower to $1.3570. Key data for the euro later today will be services PMI data from the Euro zone.
Aussie was weak on the back of the soft China PMI data, since China is a major export destination for Australia. AUDUSD traded between $0.8942 and $0.8982.
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