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Yen supported by risk aversion, euro sags on political woes

Tuesday, February 7, 2017 - 08:55

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The US dollar stood near a 10-week low against the yen early on Tuesday as investors sought refuge in the safe-haven Japanese currency, while the euro languished on French political woes.

[TOKYO] The US dollar stood near a 10-week low against the yen early on Tuesday as investors sought refuge in the safe-haven Japanese currency, while the euro languished on French political woes.

The US dollar was little changed at 111.730 yen, in close range of 111.625, its lowest since Nov 29 plumbed overnight.

The greenback sank 0.7 per cent against the yen the previous day on rising risk aversion, with US Treasury yields falling in tandem with Wall Street shares and crude oil prices.

The US currency has fallen 4.5 per cent against the yen so far this year, hurt in large part by US President Donald Trump's protectionist trade rhetoric.

sentifi.com

Market voices on:

"With the protectionist trade stance the United States is seemingly poised to adopt now a key market theme, the December US trade data due later today garners attention," said Masafumi Yamamoto, chief FX strategist at Mizuho Securities in Tokyo.

"A trade deficit that exceeds forecasts would weigh on the dollar by raising caution in the market towards top US officials, who may speak out against perceived dollar strength."

The euro fetched 120.145 yen, in close proximity of a two-month low of 119.975 set overnight when it shed 1.1 per cent.

The common currency was steady at US$1.0748 after dropping 0.3 per cent overnight. The decline pulled the euro further away from an eight-week high of US$1.0829 scaled on Thursday against a broadly weaker US dollar.

The euro staggered on Monday after France's far-right National Front leader Marine Le Pen launched her presidential bid, vowing to fight globalisation and take France out of the euro zone. French government bond yields rose sharply amid perceived risks to the already strained European political establishment.

The euro wobbled against such a backdrop, with investors also having to factor in elections in other parts of the European Union.

Dutch and German elections will be held in March and September. Another presidential election looms in Italy, even as former Italian prime minister Matteo Renzi said he was willing to shelve his push for early voting.

The Australian dollar was down 0.2 per cent at US$0.7646 following the drop in commodities such as crude oil the previous day.

The Aussie inched down to 85.43 yen, adding to losses from the day before when it shed more than one per cent against the Japanese currency.

REUTERS

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