FX round-up : Dissapointing data and simmering geopolitical tensions boost haven currencies

Disappointing economic data releases weighed on both sides of the Atlantic today with a negative goods trade balance for the UK (-0.1% versus expectations of 1.4%), higher unemployment claims from the US (244,000) and also a negative month-on-month PPI figure for the US (-0.1%).

Coupled with a continued simmering tension between the US and North Korea, that trio of data led to another positive day for safe haven currencies such as the Japanese yen and Swiss franc (CHF).

Looking at the yen, overnight trading was fairly subdued with a 109.89/110.16 range taking hold. Come the UK trading session and a continued sell-off was seen, taking the pair to an eight week low.

Shaun Osborn from Scotiabank said, “The yen is the big story really. Risk aversion is still very much a concern for markets.”

By 1600 BST, USD/JPY was hitting lows of 109.37, down 0.62% on the day.

The Swiss franc faired much the same fate for the same reasons and was fairly flat overnight. The UK trading session took USD/CHF lower to hit a day low of 0.9630 towards the closing bell, but closed up slightly on the day by 0.03%.

The Swiss franc and Japanese yen are often sought out in times of geopolitical tension or global financial stress, partly because both countries have big current account surpluses.

Possibly due to the lack of appetite for risk in the market, the euro suffered on Thursday, down slightly against the dollar by 0.09% at 1.1749, slipping towards a two week low.

Manuel Oliveri of Credit Agricole said about the single currency,”The euro has become more correlated to risk in recent weeks and sentiment is still a bit cautious,” adding “though the euro upside trend is likely to remain intact over the longer term.”

Against the pound, the euro managed to gain margially, rising 0.06% to 0.9047.

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