Forex – Yen Gains on Safe-Haven Bid; China’s Caixin PMI in Focus

© Reuters. – The Japanese yen gained on Wednesday in Asia as stock markets traded mostly lower on the first trading day of the new year.

The safe-haven yen rose against the dollar, as the pair fell 0.3% to 109.42 by 12:01 AM ET (05:01 GMT), after most Asian stocks traded in the negative territory today, with Hong Kong’s plunged as much as 3.1%. Wider concerns about global economic growth, the U.S. government shutdown and a slower pace of Federal Reserve rate hikes were cited as catalysts for the selling.

Meanwhile, disappointing economic data from China also piled pressure on Chinese stocks.

The for December fell to 49.7, from 50.2 in November, marking the first contraction in 19 months.

A reading below 50 signals contraction.

The reading confirmed a trend seen in the official PMI that was reported on Monday, which showed a drop to 49.4 in December.

The pair was down 0.3% to 6.8557 following the release of the data.

The U.S.-Sino trade dispute received some continued focus this week. Reports that Trump indicated progress had been made toward a potential settlement with China provided some cause for optimism, although The People’s Daily, China’s state-owned newspaper, cautioned on Wednesday that Beijing “has not given in, is not giving in, and will never give in” in matters related to core national interests.

“Regardless of the development of Sino-U.S. relations, China’s strategic choice to deepen reform and opening is unswerving, and we are committed to doing our own thing”, the article added.

Elsewhere, the that tracks the greenback against a basket of other currencies was little changed at 95.703.

Reports on late Tuesday suggested U.S. President Donald Trump is willing to make a deal to end a government shutdown.

“Border Security and the Wall “thing” and Shutdown is not where Nancy Pelosi wanted to start her tenure as Speaker! Let’s make a deal?,” the President said on twitter.

Parts of the government have now been shut for 11 days, affecting 9 of the 15 federal departments, dozens of agencies, and hundreds of thousands of workers, according to reports.

The Australian dollar was down 0.4% at 0.7025 against the U.S. dollar, reflecting China’s worsening growth outlook.

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