Global growth concerns boost safe havens: yen, Swiss franc

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Safe haven currencies the Japanese yen and Swiss franc gained on Wednesday after New Zealand's central bank cut interest rates by more than expected, feeding concerns about the weak global economy.

The Reserve Bank of New Zealand cut its official cash rate to a record low of 1% and flagged the possibility of using negative rates to stimulate the economy, sending its currency to 3-1/2 year lows. The Reserve Bank of India and the Bank of Thailand also cut rates.

While central banks globally are adopting a more dovish outlook, investors remain worried.

"You've seen a couple of central banks ease policy today, some by more than expected, and you're still seeing a more cautious market backdrop, said Erik Nelson, a currency strategist at Wells Fargo in New York. "I think there may still be some lingering concern over how much this easing will really support the global economy, or just maybe the idea of monetary policy impotence is in investors minds here," Nelson said.

The New Zealand dollar was last down 1.1% at $0.645 , bouncing off the session low of $0.6379. The Aussie fell 0.49% to $0.6725 as markets ramped up bets that Australia would cut rates faster and deeper than expected.

The session low for the Australian dollar was $0.6678, the lowest since early 2009.

The Japanese yen gained 0.39% to 106.03 against the greenback, nearing an eight-month high of 105.51 reached on Tuesday.

The Swiss franc gained 0.37% to 0.9727 against the U.S. currency. The escalating U.S.-China trade war is adding to economic headwinds and hurting business sentiment.

Last week, U.S. President Donald Trump said he would impose more tariffs on Chinese goods. On Monday, China responded by allowing its currency to weaken past 7 per dollar for the first time since 2008, and Washington labeled Beijing a currency manipulator.

The yuan weakened on Wednesday, but held above an 11-year low reached the previous session, before Beijing appeared to take steps to stabilize the currency. The offshore yuan fell 0.52% to 7.0891.