The safe-haven yen stood tall on Wednesday, having risen broadly as risk appetite waned in the wake of a plunge in German industrial output and after the IMF cut its global economic growth forecasts for a third time this year. The dollar traded at 108.335 yen JPY= after sliding to a three-week low of 107.82 yen JPY=, further recoiling from a six-year high of 110.09 set a week ago. The euro dipped to its lowest in a month to 136.50 yen EURJPY=R before edging back to 136.90.
Data on Tuesday showed German industrial output fell 4.0 percent in August from July, the biggest decline since the height of the financial crisis. At the same time, the IMF nudged its global growth forecast down to 3.3 percent for this year from 3.4 percent, warning of weaker growth in core euro zone countries, Japan and big emerging markets such as Brazil.
Slightly at odds with the IMF, Bank of Japan Governor Haruhiko Kuroda remained upbeat on Tuesday about the economic outlook and shrugged off the need to expand the bank’s already massive stimulus program. The disappointing German data, combined with the gloomy IMF forecast, knocked European and U.S. stocks sharply lower.
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