Investing.com - The yen rose to three week highs against the dollar as widespread risk aversion persisted on Tuesday and the Russian ruble jumped after the central bank hiked rates overnight in an effort to prevent the collapse of the currency.
USD/JPY slid to 117.25, the lowest level since November 19, from 117.80 late Monday.
The traditional safe haven yen was boosted after data overnight showing that factory activity in China contracted for the first time in seven months in December. The weak data added to concerns over the weakening global economy.
The preliminary reading of China's HSBC manufacturing purchasing managers’ index came in at 49.5, down from a final reading of 50.0 in November and below forecasts of 49.9.
Investors were waiting on what would be closely watched surveys of euro zone private sector activity later in the day. The ZEW survey of German investor confidence was also due for release later Tuesday.
EUR/USD edged up 0.13% to 1.2451, while EUR/JPY was down 0.24% to 146.17.
Investors also remained wary ahead of Wednesday’s Federal Reserve meeting, as ongoing speculation over the prospects for a U.S. rate hike next year fuelled expectations that the U.S. central bank could adjust its forward guidance.
Elsewhere, the ruble rebounded against the dollar after the Russian central bank hiked interest rates to 17%, from 10.5% at an emergency meeting overnight.
USD/RUB dropped 6.95% to 61.04, after rising 11% to highs of 65.99 on Monday. The selloff in the ruble came amid fears that a rout in global oil prices would devastate Russia’s commodity-exposed economy.
The central bank said the increase in the key interest rate, which will deepen Russia’s recession if sustained for a prolonged period, was necessary to prop up the currency and stem spiraling inflation.
The bank said on Monday it had conducted $478 million worth of forex market interventions on December 11, bringing the total amount of reserves spent propping up the currency this month to nearly $6 billion.
The ruble also rebounded against the euro, with EUR/RUB down 6.49% to 76.29 from highs of 82.10 on Monday.