Dollar struggles after disappointing US, China data

The dollar struggled against the yen and euro Monday as US and Chinese data disappointed markets, while the euro recovered slightly after falling on fears about the new Greek government’s testy talks with international creditors.

In Tokyo afternoon trade, the dollar edged up to 117.63 yen from 117.59 yen in New York.

The euro rose to $1.1303 from $1.1284, and to 132.97 yen from 132.70 yen in US trade.

The US Commerce Department said Friday that the world’s top economy expanded at an annual rate of 2.6 percent in the fourth quarter, well below the 5.0 percent in the previous three months.

The disappointment was compounded by news that prices in the eurozone fell by a record 0.6 percent in January, fanning concerns that the currency bloc is facing years of deflation.

Traders were also reacting Monday to news that China’s official purchasing managers index (PMI) of manufacturing activity unexpectedly retreated last month for the first time in more than two years.

Data Sunday showed its PMI at 49.8 last month, against 50.1 in December. Anything below 50 points to contraction and anything above indicates growth.

“Market sentiment is turning risk-averse after both the US growth figures and the Chinese manufacturing data fell short of estimates,” Atsushi Hirano, head of FX sales in Japan at Royal Bank of Scotland, told Bloomberg News.

“There’s a growing risk the yen could climb to the mid-115 level versus the dollar by the middle of this week.”

Currency traders tend to move into the yen during times of uncertainty or turmoil.

The euro had earlier faced selling pressure after Greece’s new anti-austerity Finance Minister Yanis Varoufakis said despite warnings that Athens would shortly run out of money, the far-left Syriza-led government preferred to do without fresh cash, and instead renegotiate its entire bailout.

At a strained press conference with Eurogroup chief Jeroen Dijsselbloem, Varoufakis said Greece was willing to negotiate with its lenders but not with an international troika of creditors — the European Union, the European Central Bank and the International Monetary Fund.

Athens has been promised 7.2 billion euros in funds from the troika if it completes specified reforms by February 28.

The dollar was mostly stronger against other Asia-Pacific currencies.

It rose to 61.86 Indian rupees from 61.80 rupees on Friday, to 12,688.10 Indonesian rupiah from 12,615 rupiah, to 1,103.24 South Korean won from 1,096.28 won, and to Tw$31.60 from Tw$31.53.

The dollar also strengthened to 44.17 Philippine pesos from 44.08 pesos and to Sg$1.3538 from Sg$1.3515, while it slipped to 32.57 Thai baht from 32.72 baht

The Australian dollar weakened to 77.88 US cents from 77.97 cents.

The Chinese yuan fetched 18.79 yen against 18.87 yen.