Forex Flash: China PMI reinforces growth concerns supporting yen - BTMU

FXstreet.com (Barcelona) - Lee Hardman, FX analyst at the Bank of Tokyo Mitsubishi UFJ note that the Yen has strengthened overnight with USD/JPY again failing to break the key resistance at 100.00.

He sees that the Yen has derived support from the release of the weaker than expected HSBC China Manufacturing PMI survey, and the report has reinforced building investor concerns over the global growth outlook, which has largely driven market direction over the last couple of weeks outweighing at least temporarily support for risk assets from loosening global liquidity conditions. He adds that commodity currencies have continued their under performance and remain at risk of a further correction lower in the near-term.

He continues to note that the HSBC China Manufacturing PMI survey revealed that business confidence declined more markedly than expected to 50.5 in April from 51.6 in March. He writes, “The sub-components also revealed that new orders weakened while manufacturers had to increase inventories, signalling a further weakening in industrial production growth. The new-export orders sub-component declined even more sharply by 1.9 percentage points to 48.6 moving back into contractionary territory highlighting that weak external demand has likely weakened further. The weak PMI survey closely follows the disappointing Q1 GDP report which are both prompting investors to dampen their expectations for the pace of economic recovery in China resulting in projections for GDP growth in 2013 being lowered below 8.0%.”