USD/JPY below 120 yen, oil slides again

The slide in oil prices has outweighed some relatively positive readings on services sector activity in China, data showed this morning.

In late morning trade, Brent crude is down 0.6 per cent at $32.52 a barrel, while West Texas Intermediate is off by 0.7 per cent at $29.67.

China’s services sector expanded the most in six months, according to a closely-watched private survey.

The Caixin-Markit services PMI came in at 52.4 in January, up from 50.2 in December. Readings above 50 indicate an expansion, and that takes the index to its highest level since July, when it was at 53.8.

In other data, Australia’s building approvals growth in December surprised to the upside. Approvals to build new homes rose 9.2 per cent month-on-month in December, recovering from a revised 12.4 per cent tumble (previously -12.7 per cent) in November. The rate was more than double the 4.2 per cent pace expected by economists.

Despite the positive data, the aussie was treading lower against the greenback this morning, last at $0.7020 due to risk aversion. As a result of low risk appetite, the safe haven yen strengthened, pushing the USD/JPY below the key 120 yen level.

Asian markets have slumped in morning trading, again following the oil price lower.

Hong Kong’s Hang Seng is down 3 per cent and Australia’s S&P/ASX 200 is down 2.2 per cent. Energy is the hardest hit sector in both locations, down 4.5 per cent and 4.4 per cent, respectively. The Shanghai Composite is down 1.2 per cent. Japan’s benchmarks – the Nikkei 225 and the broader Topix – are both down 3.6 per cent.

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