Yen rises, US dollar steadies as market slides

London

A STRONGER Japanese yen was the product of a build-up of worries in financial markets on Wednesday, after US tech stocks sold off on Sept 8 and a leading coronavirus vaccine candidate faced delay.

The US dollar also found some support as the stock market slide spooked investors into selling riskier currencies, while worries about the fate of Brexit talks pushed the pound down to a new six-week low.

In the early European session the US dollar was mostly steady, pulling back from early gains against most majors as US equity futures pared losses.

AstraZeneca plc said it had paused global trials of its experimental coronavirus vaccine due to an unexplained illness in a study participant.

Roll-out of an effective vaccine is seen as key for economies to overcome the effects of the pandemic.

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Traders, returning from summer holidays, are faced with a bouquet of risk factors as they enter the autumn period of trading - the US election in November, Brexit, US-China trade tensions, central bank policy decisions, rising cases of the coronavirus - many of which would dent the appetite for riskier assets and inject strength into safe havens.

Euro/dollar was last trading steady at US$1.1772, having fallen earlier to a near three-week low of US$1.1757 as the dollar rose.

Dollar/Japanese yen fell 0.1 per cent at 105.92 after touching an eight-day low of 105.78.

Investors await Thursday's European Central Bank (ECB) meeting with some trepidation.

The common currency has lost about 2 per cent since posting a 28-month high above US$1.20 on Sept 1, spurred lower by comments from ECB chief economist Philip Lane who said the exchange rate mattered to monetary policy.

Any hint of concern at the currency's rise, or that low inflation will require ultra-easy policy for a very long time could whack the euro lower again and boost the dollar.

An overnight slump in the oil price dragged down oil exporters' currencies. The Norwegian crown extended an overnight fall to hit a more than six-week low of 9.1810 per dollar and was last down 0.3 per cent at 9.1205.

Sterling was unable to shake pressure as fears grow that Britain is preparing to undercut its Brexit divorce treaty. It dipped 0.3 per cent to US$1.2948, after touching its lowest since July 29. The pound also languished at a six-week low of 91.06 pence against the euro. REUTERS