2014.03.1201:34:30UTC+00Japanese Yen soars as investors avoid risk

The yen advances in the early Wednesday trading action while investors kept their distance from risk currencies such as the Australian dollar in the middle of worries about China's economic growth and following a late decline on Wall Street.

An absence of major economic data and fresh market-moving news saw traders take their cue from stock market moves, although the euro was briefly unsettled after a European Central Bank official warned the bank could still ease if needed.

ECB Vice President Vitor Constancio was also reported as stating markets had not fully taken in the point the ECB made last week when it pointed out on the decline in the economy of the eurozone.

His remarks saw the euro relinquish ground versus the U.S. dollar and yen. It last exchanged at $1.3857 and 142.67 yen, taking care of its misses of up to 0.4 percent. Still, the common currency was not far from a 2-1/2 year high of $1.3915 set last week.

The retreat in the euro aided the U.S. dollar index soared to 79.788 .DXY, away from a four-month trough of 79.433 recorded last week. But the greenback is having a hard time against the yen, sagging down to 102.97 from Tuesday's high of 103.43.

The yen tends to move higher compare to the other major currencies in times of heightened market stress, specifically versus commodity currencies such as the Aussie dollar.

Further working versus the Aussie were concerns about a slowdown in Chinese economic development and a latest pullback in the financial worth of iron ore, Australia's largest export earner.

"Focus seemed to have shifted away from Ukraine and back to China this week, with metals prices slumping on concerns stemming from China and in turn undermining commodity sensitive G10 and EM currencies," analysts at BNP Paribas wrote in a note to customers.

The assemblage of negative factors saw the Aussie plummeted 0.7 percent versus the yen to 92.39. On the greenback, it was once again under 90 U.S. cents.

"There are a lot of questions around China's situation right now: is industrial and consumer demand fading, are we about to see further defaults across the financial spectrum, is the credit crunch about to resurface," said Evan Lucas, strategist at IG in Melbourne.

"All of these macro issues are feeding into China hysteria. What is compounding the situation is the emergence of how much copper and ore is being used as collateral."

In contrary, the Kiwi dollar of New Zealand was remarkably steady at $0.8472. It also barely gave way to the broadly surging yen at 87.16.

Traders stated that investors were reluctant to merchandise the kiwi given the Reserve Bank of New Zealand (RBNZ) is widely expected to hike interest rates on Thursday.

A Reuters poll this week displayed that the RBNZ is set to increase rates by 25 basis points and lay out a way for a series of further hikes, taking the lead among developed economies in tightening policy.

The Bank of Thailand, on the other hand, is likely to trim down interest rates later in the day to aid Southeast Asia's second-biggest economy cope with prolonged political unrest in Bangkok.