U.S. Markets

Yen rallies on global stock market rout after Chinese data

NEW YORK (Reuters) - The Japanese yen rose broadly on Monday, as traders piled into the traditional low-risk currency after disappointing Chinese factory data sparked a selloff on global stock markets.

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The yen rose to an 11-week high against the dollar and climbed to a level not seen since April versus the euro.

“It’s your classic risk-off move and you have your safe-haven play in the yen,” said Alberto Boquin, FX macro strategist at J.P. Morgan Private Bank in New York.

Shanghai shares slid 7 percent on the Chinese data, which sparked worries about the path of the global economy and made further U.S. interest rate hikes less likely.

The U.S. Federal Reserve raised interest rates in December, its first rate hike in nearly a decade, a move that helped buoy the dollar.

“Global weakness could throw a wrench against another U.S. rate hike,” said Joe Manimbo, senior market analyst with Western Union Business Solutions in Washington.

China's yuan currency CNH=D3CNY= hit its lowest level in more than four years in both onshore and offshore trade.

Nervousness about the ongoing contraction among Chinese manufacturers despite Beijing’s surprise currency devaluation in August sent traders to embrace the yen.

The yen rose 0.7 percent against the dollar, to 119.40 yen JPY=, after hitting hit an 11-week high of 118.68 yen. Against the euro EURJPY=, the yen was last up 1 percent at 129.17 yen, after earlier rising as high as 128.64 yen.

Renewed worries about China, the world’s second largest economy, also hurt the Australian dollar and other currencies whose economies export heavily to China.

The Aussie and New Zealand dollars were down more than 1 percent NZD=AUD= against the U.S. dollar, while the Canadian dollar shed 0.9 percent to stand at C$1.3950 CAD=D3.

The greenback erased earlier losses against the euro after data showed German inflation unexpectedly slowed in December, bringing the annual rate in 2015 to the lowest rate on record.

Against the dollar, the euro EUR= was down 0.3 percent, at $1.0829, retreating from a session high of $1.0946.

“The last thing Europe needs is low inflation. It reinforces the notion of further easing policy at the European Central Bank,” Western Union’s Manimbo said.

Among other European currencies, the Swedish crown fell against the euro and dollar after the country’s central bank gave its governor the power to intervene immediately to weaken the crown in a bid to stimulate the country’s economy.

The crown was down 0.7 percent against the dollar, at 8.5011 crown SEK=, and 0.2 percent lower against the euro, at 9.2101 crown EURSEK=.

Additional reporting by Patrick Graham in London; Editing by Alistair Bell, David Gregorio and Leslie Adler