* Yen on brink of break past resistance at 103 yen per
* China, emerging market worries spark selloff in risk
* Euro helped by inflows, rising c/a surplus
* Aussie and Canadian dollars hit hard
By Patrick Graham
LONDON, Jan 24 The yen, Swiss franc and euro
held firm on Friday having charged higher overnight after
worries about a slowdown in China and turmoil in some emerging
markets spurred demand for safe-haven currencies.
In the face of a nervous market, comments from a Reserve
Bank of Australia policymaker that the Australian dollar had not
fallen far enough drove the currency to 3 1/2-year lows.
If analysts are agreed on one thing in a jumbled start to
the year for major currency markets, it is that money is set to
drain out of emerging economies. Investors, partly underlining
this, have bid strongly for a flurry of large bond issues in the
euro zone this month.
That goes some way to explaining, along with another poorer
batch of U.S. data on Thursday, why the year's other major bet -
a stronger dollar against the euro - has as yet failed to
"European assets have become a sort of safe haven for
investors," said Alvin Tan, a currency strategist with French
bank Societe-Generale in London.
"We've seen Spanish and Portuguese debt being very
well-received by the market. Something many people also often
forget is that Germany has a bigger current account surplus in
dollar terms than China."
Data published on Thursday showed the euro zone current
account surplus hit a record high in November.
Sterling has also done well at the start of the new year,
surging to its highest against the dollar in almost three years
early on Friday on the back of speculation the Bank of England
could raise interest rates before the end of the year.
That still looks like a long shot to most, but Governor Mark
Carney's appearance at Davos later on Friday will be another
Thursday's weak Chinese manufacturing data, while influenced
by the upcoming Lunar New Year holiday, rekindled concerns of
slower growth in China as Beijing seeks to curb credit-fuelled
investment and turn the economy toward consumption.
"China is, in a way, the kingpin of emerging markets. When
the Chinese economy suffers, so do a lot of emerging
currencies," said Sho Aoyama, senior market analyst at Mizuho
Securities in Tokyo.
"The other side of the coin is, when investors avoid risk,
they buy currencies backed by a current account surplus."
The dollar fell more than 1 percent against the yen and
Swiss franc on Thursday, reaching a two-week low of 102.97 yen
and a three-week low of 0.8964 Swiss francs. On
Friday, the dollar was at 103.02 yen and 0.8975 franc.
The euro held at $1.3682, having jumped 1.1 percent
on Thursday, stalling ahead of resistance at $1.37.
In contrast, the dollar nursed heavy losses after suffering
its biggest one-day fall in four months against a basket of
major currencies, undermined by a drop in U.S. benchmark yields
to a six-week low.
The dollar index was last at 80.488, having skidded
nearly 1 percent on Thursday.
The Australian dollar fell to $0.8681 after Reserve
Bank of Australia board member Heather Ridout was reported as
saying the currency had not fallen enough and that the currency
at 80 U.S. cents would be a "fair deal" for the economy.