Yen and franc draw safe-haven bid on renewed growth fears

The safe-have yen and the Swiss franc rose on Friday after a brief pullback earlier in the week, as renewed U.S.-China trade tensions and weaker-than-expected data in those two economies revived global growth fears.

Reuters reported on Thursday that the Trump administration was considering an executive order in the new year to declare a national emergency that would bar U.S. companies from using Huawei Technologies and ZTE products.

“With the end of 90-day tariff moratorium looming ominously on the horizon, this announcement is yet another bump in the rocky path to a trade resolution,” said Stephen Innes, head of Asian trading at Oanda.

Trade tensions between the world's two largest economies have been one of the biggest drivers of risk this year, though Washington and Beijing earlier this month agreed to a 90-day ceasefire in their tariff dispute while they try to negotiate a durable deal.

Markets remain sceptical whether the two sides can bridge their differences, which go beyond trade to other issues such as intellectual property rights.

The yen added 0.1 percent, while the Swiss franc tacked on 0.16 percent in early Asian trade as renewed growth fears pushed investors back into safe havens. The anxiety in markets has helped both of these currencies put on 2.3 percent 1.2 percent, respectively, this month.

The dollar index, a gauge of its value versus six major peers, was marginally weaker at 96.51, after losing 0.5 percent overnight.

Data showing consumer confidence at its weakest in more than three years in the United States, as well as an unexpected drop in industrial profits in China provided a stark reminder to investors of the deteriorating global growth outlook.

That came just a day after a dramatic surge on Wall Street had given some respite to battered investor sentiment. Overnight, U.S. stocks ended higher in a volatile session.

Financial markets are expecting U.S. growth to slow next year as the spillover effects from rising interest rates hit corporate profits and economic activity.

“There are intensifying headwinds facing the US economy in 2019 namely the lagged effects of higher borrowing costs, the stronger dollar, the fading support from the fiscal stimulus and weaker external demand at a time of rising trade protectionism. These factors will increasingly weigh on sentiment in 2019,” said James Knightley, chief international economist at ING in a note.

Elsewhere, oil prices have shown no respite from a steep sell-off over the last few months, which in turn has kept commodity currencies such as the Canadian dollar under heavy pressure. The loonie changed hands at C$1.3620 and has lost 7.5 percent of its value versus the dollar this year.

The euro was relatively flat at $1.1433, having struggled this month on weakening euro zone data.

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