Recent statistics reflect a trend that discourages any desire to take risks.
According to data released on Thursday, the yen, traditionally used as a safe haven, began to show fluctuations against the dollar. Thus, we can say that the seven-week high has come to an end. The reason is quite simple: investors have lost interest in risky assets in view of the constantly incoming unpleasant statistics on world economic data. In addition, they are under pressure from rising trade tensions, as well as well-justified fears about a slowdown in the Euro zone economy.
The last strong level of the yen was consolidated at 106.30 per dollar, which is higher than the previous growth, which reached the level of 105, 985 per dollar. In relation to the European currency, the yen is trading at a price of 114.72 per euro, which is still the maximum value for the last three and a half years.
According to analysts, the rise in the yen is due to questions about the ECB stimulus program. In addition, some currency confusion is taking place amid growing tensions between the two leading economies - the United States and China.
It can be recalled that the German constitutional court ordered the ECB two days ago to justify purchases made under the bond redemption program within three months. Otherwise, the financial regulator will have to stop participating in the main incentive scheme.
The negative mood was supported by news from overseas. While the US President's administration is considering special punitive measures against China, which has become the center of distribution of COVID-19 around the world, Secretary of State Mike Pompeo hastened to return to aggressive criticism of the country with renewed vigor.
A drawback was also added by US President Donald Trump himself, who yesterday recalled that he continues to carefully monitor how China fulfills its part of the agreements on the first phase of the trade deal concluded between the countries at the beginning of this year, when the spread of coronavirus infection around the world was not recorded.
Chinese analysts also agree that the temporary relaxation of tensions and risky transactions noted last month could not have a long-term perspective.
Internal indicators also continue to show negative dynamics so far. Thus, a private business survey reflected a decline in the activity of the services sector in April, despite the fact that the official quarantine was lifted more than two months ago.
Another indicator is the Caixin/Markit services sector purchasing managers index (PMI) although it was able to strengthen its position in April, moving from 43 to 44.4 points, it still remained much lower than the country's traditional values in the range from 51 to 55 points.
Moreover, weak consumption in China is confirmed by the fact that state imports continue to decline rapidly. The data showed that compared with the same period last year, it decreased by 14.2%, which is a significant drop. At the same time, the decline was even lower than the preliminary forecasts of economists, who did not expect a decline below 11.2%.
There are some positive points that do not allow the development of negative dynamics in the worst case scenario. Thus, an increase of 3.5% was noted in the export zone, although it was mentioned earlier that a possible fall would immediately decline by 15.7%. In general, this allowed a little support for the Chinese yuan and the Australian dollar. The first became 0.1% stronger and reached the level of 7.0959, the second - 0.35%, which put it at the level of 0.6438 dollars.
However, even this positivity does not allow us to talk about the improvement of global negative trends. The unjustified risk is now inappropriate, which has fatally affected the currencies of emerging markets.
