NEW YORK (Reuters) - The yen and Swiss franc gained on Friday, as investors sought the safe-haven currencies due to nagging U.S.-China trade war jitters, renewed political uncertainty in Italy and weak economic data around the world.
Deep liquidity and current account surpluses in Japan and Switzerland attract safe-haven flows to those currencies during times of geopolitical and economic stress.
“What wouldn’t make safe havens look attractive this week,” said John Doyle, vice president for dealing and trading at Tempus, Inc. in Washington.
“The equity board is awash in red. The trade tensions are a big thing and if you look around the world, all the data were negative, or at least concerning. So of course, we’re going to see an uptick in the Swissie (franc) and the yen,” he added.
Fears of Washington’s trade war with Beijing escalated after Bloomberg reported the United States has again held off on granting licenses to China’s telecom equipment maker Huawei.
U.S. data showed underlying producer prices fell 0.1% in July, suggesting inflation remained muted. Canada’s economy lost 24,200 jobs last month. 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.
There was a sell-off in Italiana bonds as Italy added to the global tension. The ruling League party filed a no-confidence motion against the prime minister, a move the party’s populist chief Matteo Salvani hopes will trigger early elections and install him as the new leader.
The dollar weakened against a basket of currencies, pressured as U.S. President Donald Trump repeated his call for a weaker currency to help American manufacturers.
Trump told reporters at the White House he believes the Federal Reserve needs to lower interest rates by a full percentage point.
In late morning trading, the dollar fell 0.4% against a surging yen to 105.61 yen JPY=, near the seven-month low of 105.5 hit earlier this week. The yen was on course for its second weekly gain versus the U.S. dollar and its third weekly gain versus the Australian and New Zealand dollars.
The Swiss franc rose versus the dollar and euro. The dollar was last down 0.2% at 0.9732 franc CHF=, while the euro slipped 0.1% at 1.0893 francs EURCHF=.
The euro rose against the dollar to $1.1198 EUR=., showing little reaction after Salvini called for early elections.
The dollar index .DXY dipped 0.1% slipped to 97.545 .DXY and remained on course for its biggest weekly decline since June 21.
Sterling fell 0.5% to $1.2075 GBP= against the dollar and 0.7% versus the euro, which rose to 92.74 pence EURGBP=, after the UK’s weak data.