Dollar sinks vs yen as U.S. Treasury curve flashes warning
* U.S. Treasury curve inverts after PMI data misses
* Euro hit by German PMI miss
* Pound up as Britain's May gets "last chance" for orderly
(Updates prices, adds comment)
By Saqib Iqbal Ahmed
NEW YORK, March 22 (Reuters) - The dollar fell against the
safe-haven Japanese yen on Friday as dismal U.S. manufacturing
data fueled worries about the wider economy, and Treasury bond
yields signaled growing fears of a recession.
The dollar, however, rose against the euro as a much
weaker-than-expected German manufacturing survey raised concerns
that Europe's powerhouse economy may be slowing.
On Friday, the spread between 3-month Treasury bills
and 10-year note yields inverted for the
first time since 2007 after U.S. PMI manufacturing data missed
estimates. This inversion of the yield curve is widely seen as a
leading indicator of recession.
"You have to take it seriously that it is a signal for
slowing growth or a potential recession in the next 12 to 18
months. This is what the Fed looks at closely," said Sean Simko,
head of global fixed income management at SEI Investments Co in
The dollar was 0.66 percent lower against the yen at
110.07, a nearly six-week high for the Japanese currency.
"The recovery (in the yen) is not on the strength of the
Japanese economy, it's more about safe-haven flows," said
Alfonso Esparza, senior currency analyst at OANDA in Toronto.
Japan is the world's biggest creditor nation, and its
currency benefits when Japanese investors repatriate funds in
times of financial or geopolitical stress.
The dollar, which came under pressure after the Federal
Reserve surprised investors on Wednesday by abandoning all plans
to raise interest rates this year, found some relief from a
"March's flash PMIs add to evidence that GDP growth was
subdued in the three largest advanced economies in Q1, with
Germany continuing to take the brunt of the global manufacturing
slowdown," Simon MacAdam, global economist as Capital Economics,
wrote in a note.
The euro was 0.69 percent lower against the
"It helps to reinforce the idea that we are looking at a
more meaningful and more widespread slowdown than markets had
anticipated a few months ago," said Karl Schamotta, director of
foreign exchange strategy and structured products at Cambridge
"What we are seeing is sort of a recognition that the Fed is
reacting to deeper risks in the global economy," he said.
The British pound, weighed down by fears Britain could exit
the European Union on March 29 without a deal in place,
recovered overnight when EU leaders gave Prime Minister Theresa
May a two-week reprieve to decide how Britain would leave.
The pound was 0.74 percent higher against the dollar.
The Canadian dollar weakened to an 11-day low against
its U.S. counterpart as data supported the view of a slowing
(Reporting by Saqib Iqbal Ahmed; additional reporting by
Richard Leong; Editing by David Gregorio, Richard Chang and
First Published: 2019-03-22 03:01:14
Updated 2019-03-22 21:17:40
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