Dollar mixed in Asian trade on Chinese data

June 12, 2009

, TOKYO, Jun 12 – The dollar was mixed in Asian trade Friday as investors weighed prospects for a recovery in the world economy, bolstered by an increase in China\’s factory output.

The dollar edged up to 97.75 yen in Tokyo morning trade from 97.60 in New York late Thursday. The euro firmed to 1.4113 dollars from 1.4106 and to 137.94 yen from 137.72.

The greenback was likely to remain pressured as hopes for a global economic recovery sap demand for the safe-haven currency, said Hachijuni Bank forex strategist Masatsugu Miyata.

The dollar was seen as a safe haven during the global crisis but has been hit recently as signs of a recovery have seen funds flow into higher-yielding commodity currencies such as the Canadian, Australian and New Zealand dollars.

Those countries are heavily dependent on raw material exports.

"Sentiment toward a world economic recovery is on the uptick," said Miyata.

China\’s industrial output rose 8.9 percent in May from last year, according to official data and in line with market expectations following a mainland media report this week.

The figure was up from 7.3 percent in April and also surpassed the 8.3 percent seen in March, China\’s National Bureau of Statistics said Friday.

Traders said appetite for risk was increasing amid growing signs the US economy could recover late this year.

Washington said Thursday that retail sales rose in May for the first time in three months and in line with market expectations while new claims for unemployment benefits fell last week for the fourth consecutive week.

Meanwhile markets were also looking to a Group of Eight finance meeting in Italy starting Friday, which gathers ministers from Britain, Canada, France, Germany, Italy, Japan, Russia and the United States.

While little solid is expected, the meeting could see sparring over the safety of US investments, and calls for European banks to undergo "stress tests" similar to those seen in the US, SMBC chief strategist Daisuke Uno said.

Moscow recently said it would shift part of its reserves from US Treasurys into International Monetary Fund bonds and commercial bank deposits amid questions over the greenback\’s future as the global reserve currency.


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