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Yen and Swiss franc advance on trade fears, bleak global data

New York

THE yen and Swiss franc gained on Friday as investors sought safe-haven currencies due to US-China trade war concerns and weak economic data around the world. Deep liquidity and current account surpluses in Japan and Switzerland attract safe-haven flows to their currencies during times of geopolitical and economic stress.

"The strength of the yen will not be welcomed by the BOJ (Bank of Japan), which continues to struggle to push Japanese CPI inflation towards its 2 per cent goal," said Jane Foley, senior FX strategist at Rabobank in London.

The yen soared to a seven-month high against the dollar. "The recent escalation in trade wars between the US and China suggests there is potential for robust demand for safe-haven assets going forward and this implies ample scope for a firmer yen," she added. The same holds true for the Swiss franc, Ms Foley said, with the economy also in a much better budget position than Japan.

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In Britain, the economy shrank for the first time since 2012 in the second quarter and sterling slid to a 31-month low against the dollar.

"Take your pick. You look around the world, all the data were negative or at least concerning," said John Doyle, vice-president for dealing and trading at Tempus in Washington. "Of course, you're going to see an uptick in the Swissie (franc) and the yen."

The dollar weakened against a basket of currencies, pressured as US President Donald Trump repeated his call for a weaker currency to help American manufacturers. He told reporters at the White House he believes the Federal Reserve needs to lower interest rates by a full percentage point.

The yen posted its second weekly gain versus the US dollar and its third weekly rise versus the Australian and New Zealand dollars.

The Swiss franc rose versus the dollar and euro. The dollar was last down 0.3 per cent at 0.9723 franc, while the euro slipped 0.1 per cent at 1.0892 francs.

The euro rose 0.2 per cent against the dollar to US$1.1205.

Sterling fell 0.7 per cent to US$1.2050 against the dollar and 0.7 per cent versus the euro, which rose to 92.81 pence, after weak data from the UK. REUTERS