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FOREX-Yen rebounds after China GDP disappoints

Published 04/16/2009, 12:11 AM
Updated 04/16/2009, 12:32 AM
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* Yen jumps vs dollar, Aussie, other majors after China GDP

* Yen fell before data on anticipation of more upbeat number

By Kaori Kaneko

TOKYO, April 16 (Reuters) - The yen jumped against the dollar and other major currencies on Thursday after data showed China's economic growth slowed to its weakest on record, disappointing players who had bought higher-yielding currencies in anticipation of more upbeat numbers.

The yen had fallen earlier in the day as short-term speculators bought commodity currencies such as the Australian dollar ahead of the GDP figures, expecting the data would outstrip forecasts in a positive signal for the global economy.

Low interest rates in Japan have made investors use the yen as a funding currency to buy higher-yielding assets such as the Australian and New Zealand dollars, where official rates are 3 percent.

In the event, China's annual GDP growth slowed to 6.1 percent in the first quarter from 6.8 percent in the final three months of last year, prompting market players to reverse positions and buy the yen back.

"The data disappointed the market because there was talk that China's GDP would be around 8 percent, which pushed currencies such as the Australian dollar and sterling higher before the data," said Masato Mori, a senior manager at NTT SmartTrade.

"With the global economy weak there had been hopes that stronger-than-expected Chinese GDP would help pull it out of recession," he said.

The dollar slipped 0.3 percent on the day to 99.15 yen after the data from 99.42 beforehand, and well below a six-month high of 101.45 set last week.

The Australian dollar lost 0.4 percent to 71.94 yen after climbing to 72.75 ahead of the data, and fell 0.1 percent on the day to $0.7267, while the Canadian and New Zealand dollars also fell against the yen.

Sterling had hit a three-month high of $1.5069 early in the session after a report on Wednesday showed the pace of decline in house prices in England and Wales moderated to its slowest in a year.

Dealers said buy orders were triggered as the pound went through $1.5030/40, pushing the currency even higher. But it later shed the gains to stand flat on the day at $1.5000.

It fell 0.2 percent to 148.63 yen from about 149.46 yen before the Chinese numbers were released.

The euro was steady at $1.3218, although traders said comments by an ECB official that the central bank would lay out a package in May of non-traditional monetary policy measures to boost the economy was likely to weigh on the currency.

The market was also awaiting earnings reports from major U.S. companies such as JPMorgan on Thursday and Citigroup on Friday, traders said. (Editing by Michael Watson)

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