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Yen, franc gains on trade doubts, unrest; Aussie tanks

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LONDON — The Japanese yen and the Swiss franc led gains against a broadly weak greenback on Thursday as weak Chinese data and concerns about whether Beijing and Washington can reach a trade deal prompted investors to seek shelter in perceived safe-haven assets.

The Australian dollar was the only currency to buck the broader market trend after weak domestic employment data raised concerns that the central bank might have to loosen policy again in 2020, in stark contrast to its counterpart in New Zealand.

“Increasing signs of unrest in Hong Kong and Latin America coupled with the uncertainty around the trade talks is keeping the risk-off sentiment well and alive in FX markets,” said Lee Hardman, a London-based currency strategist at MUFG.

Against the dollar, the yen edged up 0.1% to a nine-day high at 108.70 yen. The Swiss franc rose 0.2% versus the greenback.

Adding to pressure on risk appetite, Chinese retail sales, industrial output and investment data were weaker than expected, sending the Australian dollar, already knocked by soft local employment data, to a one-month low.

U.S.-China trade negotiations have ‘hit a snag’ over farm purchases, with Beijing not wanting a deal that looks one-sided in favor of the United States, the Wall Street Journal reported on Wednesday, citing people familiar with the matter.

An agreement last month between the two economic powers to sign a “phase one” pact to end their trade war boosted optimism in global financial markets, lifting the yuan and other risk-sensitive currencies.

The Swiss franc has been particularly strong this week, outpacing even the gains notched by its Japanese counterpart on some bets that the Swiss National Bank has stepped back from its currency interventionist approach.

The franc traded at 1.0880 per euro, just below Wednesday’s peak of 1.0879.

The Australian dollar was down more than a half percentage point to its lowest levels since mid-October at $0.6798 after the weak data.

The broader dollar index edged 0.1% lower at 98.30 from a one-month high of 98.45 tested in the previous session. (Reporting by Saikat Chatterjee; Additional reporting by Hideyuki Sano in TOKYO; Editing by Gareth Jones)

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