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Sterling extends bounce on Bremain hopes, yen sags

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Sterling rallied early on Monday as momentum swung in favour for Britain to remain in the European Union just days ahead of a referendum, helping underpin risk sentiment which in turn weighed on the safe-haven yen.

[SYDNEY] Sterling rallied early on Monday as momentum swung in favour for Britain to remain in the European Union just days ahead of a referendum, helping underpin risk sentiment which in turn weighed on the safe-haven yen.

The pound climbed 0.9 per cent to US$1.4483, extending a recovery from last week's two-month trough of US$1.4013. It jumped 1.7 per cent to 151.75 yen, pulling well away from a three-year trough of 145.34 set on Thursday.

Investors took heart after three of six opinion polls published over the weekend showed a shift towards keeping Britain in the EU, but the June 23 vote still looked too close to call.

"The poll findings will resonate today, likely seeing further advances for sterling, some renewed weakening in the yen and a firmer Australian dollar," said Ray Attrill, global co-head of FX strategy at National Australia Bank.

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Indicating a general pick-up in risk appetite, US stock futures rose 0.9 per cent, suggesting a positive open on Wall Street later in the day.

As a result, the yen dipped across the board - a move that may help ease worries about the strength in the currency.

On Friday, finance minister Taro Aso said he was deeply concerned about "one-sided, rapid and speculative" currency moves and would respond urgently if needed - a hint at possible yen-selling market intervention.

The US dollar climbed 0.6 per cent to 104.68 yen, while the euro put on 1.1 per cent to 118.72 yen.

Against the greenback, the common currency edged up 0.5 per cent to US$1.1333. The US dollar index eased 0.4 per cent to 93.825.

The Australian dollar, usually sold off in times of heightened risk aversion, gained 0.4 per cent to US$0.7422 . It rose 0.9 per cent on the yen to 77.67.

Analysts warned there is little conviction in markets and moves could easily reverse if sentiment turned negative.

"Price action seemed very tentative everywhere, reflecting a mild trimming of ultra-cautious positions ahead of this week's Brexit referendum," analysts at ANZ wrote in a note to clients.

There is little in the way of hard market-moving economic data out of Asia on Monday, leaving markets at the mercy of the ebb and flow of optimism over the UK vote.

REUTERS

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