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Forex - Dollar lower against firmer yen amid China growth fears

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Investing.com -

Investing.com - The dollar was lower against the broadly stronger yen on Tuesday as fears that the effects of slowing growth in China could spread to the U.S. economy continued to rattle markets.

USD/JPY was last at 119.74, off 0.2% for the day after falling as low as 119.25 overnight.

Concerns over China's economic woes escalated after data on Monday showed that Chinese industrial profits fell 8.8% in August from a year earlier. It was the largest decline in four years.

Market participants were looking ahead to data on China's factory sector on Wednesday for further indications on the health of the world's second-largest economy.

A sharp selloff in China's stock market and an unexpected devaluation in the yuan have roiled global markets in recent months and undermined investor confidence in Beijing's ability to manage its economy.

Sentiment on the dollar was also hit by uncertainty over whether the Federal Reserve will raise short term interest rates this year following mixed messages from central bank policymakers.

New York Fed President William Dudley and San Francisco Fed head John Williams indicated support for a rate hike in 2015 in separate speeches on Monday, but Chicago Fed President Charles Evans said rates should remain on hold until mid-2016.

The remarks came after Fed Chair Janet Yellen said last week that the bank was still on track for a rate hike before the years end.

The dollar was also weaker against the traditional safe haven Swiss franc, with USD/CHF down 0.39% to 0.9701.

The commodity linked currencies were also broadly weaker, with AUD/USD down 0.22% to 0.6974, not far from the six-year troughs of 0.6904 set on September 7.

The Canadian dollar was close to 11-year lows, with USD/CAD at 1.3407.

The euro was little changed, with EUR/USD at 1.1254.

The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, slid 0.13% to 96.01.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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