Yen Gains on Haven Flows as Chinese Stocks Drop Most in Five Years

Talking Points:

Yen Gains on Haven Flows as Chinese Shares Slump on Lending Restrictions
Swiss Franc Continues to Correct Lower After Last Week’s SNB-Driven Jump
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The Japanese Yen outperformed in overnight trade, rising as much as 0.8 percent on average against its leading counterparts. A sharp selloff on Chinese stock exchanges appeared to fuel demand for the safety-linked currency. The Shanghai Composite equity benchmark index fell in excess of 6 percent – yielding the largest decline in five years – after regulators moved to restrict margin lending.

The China Securities Regulatory Commission said it has suspected borrowing of money and stocks by the clients of the country’s leading brokerages including Citic Securities, Haitong Securities and Guotai Junan Securities Co. The move appeared to fuel fears of an exodus of capital from Chinese shares.

The Swiss Franc traded lower as prices continued to digest last week’s breakneck volatility. The currency declined as much 0.8 percent against the majors having soared to multi-year highs against the spectrum of G10 alternatives last week after the Swiss National Bank unexpectedly scrapped its three-year-old Swiss Franc cap of 1.20 against the Euro, saying the “exceptional and temporary measure…is no longer justified.”

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Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

23:30

AUD

TD Securities Inflation (MoM) (DEC)

0.0%

0.1%

23:30

AUD

TD Securities Inflation (YoY) (DEC)

1.5%

2.2%

0:01

GBP

Rightmove House Prices (MoM) (JAN)

1.4%

-2.2%

0:01

GBP

Rightmove House Prices (YoY) (JAN)

8.2%

7.0%

0:30

AUD

New Motor Vehicle Sales (MoM) (DEC)

3.0%

-0.5%

0:30

AUD

New Motor Vehicle Sales (YoY) (DEC)

-1.0%

-3.7%

4:30

JPY

Capacity Utilization (MoM) (NOV)

0.7%

4:30

JPY

Industrial Production (MoM) (NOV F)

-0.6%

4:30

JPY

Industrial Production (YoY) (NOV F)

-3.8%

5:00

JPY

Consumer Confidence Index (DEC)

38.8

37.7

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

8:15

CHF

Producer & Import Prices (YoY) (DEC)

-0.8%

-1.6%

Low

8:15

CHF

Producer & Import Prices (MoM) (DEC)

-2.4%

-0.7%

Low

9:00

EUR

Eurozone Current Account sa (NOV)

€20.5B

Low

9:00

EUR

Eurozone Current Account nsa (NOV)

€30.6B

Low

10:00

EUR

Eurozone Construction Output (MoM) (NOV)

1.3%

Low

10:00

EUR

Eurozone Construction Output (YoY) (NOV)

1.4%

Low

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EURUSD

1.1181

1.1370

1.1469

1.1559

1.1658

1.1748

1.1937

GBPUSD

1.4833

1.4993

1.5072

1.5153

1.5232

1.5313

1.5473

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

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Source: Daily fx