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Yen, Swiss franc rise as investors seek safer assets

London

THE Japanese yen rose to a one-week high and the Swiss franc gained on Wednesday as investors sought safer assets after British lawmakers forced a delay in the UK government's Brexit plans.

Foreign exchange trading was generally quiet with Brexit uncertainty hanging over the market and central bank meetings due on Thursday in Sweden, Norway and the eurozone.

On Tuesday, British lawmakers opposed Boris Johnson's timetable for pushing the Brexit legislation through parliament in three days.

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Mr Johnson now looks set to push for a general election before Christmas to break the impasse. It is up to the EU to decide whether to extend Britain's Oct 31 deadline for its departure.

Adam Cole, a strategist at RBC Capital Markets, said Brexit was driving a general risk-off tone.

"Things could change very quickly today, depending on the EU response," Mr Cole said, adding he did not see much downside risk now that a no-deal Brexit was off the table.

Morten Lund, a senior strategist at Nordea, said markets were reacting to the likelihood of a UK election.

The Japanese yen rose to 108.25 per US dollar, its strongest since Oct 15, before settling at 108.465, up marginally on the day. Versus the Australian dollar, the yen strengthened as much as 0.5 per cent.

The Swiss franc, which investors also tend to buy when they feel nervous, rose 0.1 per cent to 1.1003 francs per euro. The euro edged 0.1 per cent to US$1.1115 before Thursday's meeting of European Central Bank policymakers, outgoing president Mario Draghi's final policy meeting.

The US dollar index was up slightly at 97.592, down 2 per cent since the start of the month.

Sterling slipped as low as US$1.2842 in Asia, recovering later to around US$1.2868. That left the pound more than one cent off Monday's five-and-a-half-month high.

Australia's dollar dropped 0.2 per cent to US$0.6840 as risk aversion knocked a currency considered a barometer for investors' mood. Scandinavian currencies were being watched ahead of central bank meetings in Norway and Sweden.

The Swedish crown was little changed against the euro at 10.743 crowns per euro, while the Norwegian crown continued losses that saw it reach a record low against the euro last week. REUTERS