The yen rocketed higher on Thursday and is poised for its biggest daily rise in 20 months as growing concerns about the health of the global economy, particularly China, sent investors scurrying into the safe-haven of the Japanese currency.

The yen surged across the board, reserving some of its biggest gains against the traditional high-yielding currencies favoured by domestic retail investors such as the Australian dollar and the Turkish lira.

The break of some key technical levels in early Asian trading on Thursday triggered some massive stop-loss sales, forcing investors to unwind some of their large short yen trades against the dollar and quickly cascading into other currencies.

The dollar collapsed to as low as 104.10 yen, an eye-watering drop of 4.4 per cent from the opening level of 108.87 and the lowest reading since March 2018.

It was last trading around 107.54 yen, down 1.2 per cent on the day and poised for the biggest daily fall since November 2016. At session lows, it has fallen more than 6.5 per cent in the last five trading sessions.

While the early slide was triggered by news of a rare cut in sales forecast by Apple in its latest quarter, citing slowing iPhone sales in China, the selling quickly gathered momentum in illiquid markets, with Japan still on holiday after the New Year.

“The sharp drop in risk sentiment fuelled by weaker PMI data in China and Europe and Apple's warning has contributed to the sharp overnight move in the yen,” said Valentin Marinov, head of G10 FX research at Credit Agricole based in London.

The yen's surge against the dollar also pushed it higher against other major rivals such as the pound and the euro, against which it rose 1.8 per cent and 0.9 per cent respectively.

Market watchers say the yen's surge may have further room to run as Japanese investors have made a beeline for overseas assets, particularly US equities, in recent months on an unhedged basis and the yen's rise would force them to cover some of their short positions.

Elsewhere, the dollar was down 0.3 per cent against a basket of its rivals at 96.56, while the euro rose 0.3 per cent to $1.1372.

 

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