Yen rises to top this week on haven demand as US payrolls loom

[TOKYO] Brexit fallout has given investors plenty of reasons to flock to the yen, making it the best performing major currency this week. Friday could bring another, as markets brace for a closely watched US jobs report.

The yen has rallied 1.6 per cent against the US dollar since July 1, the most of only three peers to gain against the greenback, after an investor flight from UK property forced a number of funds to halt withdrawals. The British referendum result has fanned concerns about global growth, which had suffered a setback after data last month showed American employers added just 38,000 jobs in May, the fewest since 2010. Futures signal 12 per cent odds the Federal Reserve will raise interest rates this year.

While the effect of a surprisingly strong payrolls number would have a limited effect on the outlook for Fed tightening, "if it's surprisingly weak like last month, risk-off sentiment will probably strengthen quite a lot," said Kuniyuki Hirai, manager of foreign-exchange trading at Bank of Tokyo-Mitsubishi UFJ Ltd in New York.

Coupled with continued concern about Brexit, "it's likely that we'll see the trend for yen strength gather pace," he said.

The yen slipped 0.2 per cent to 100.96 per US dollar as of 9:56am in Tokyo, after gaining for three days. It climbed to as high as 99.02 per US dollar for the first time since November 2013 on June 24, in the immediate aftermath of the Brexit vote. Japan's currency declined 0.2 per cent to 111.70 per euro.

The pound gained 0.2 per cent to US$1.2936, trimming its decline this week to 2.5 per cent - still the largest among major currency's after the real's 3.9 per cent slide.

BLOOMBERG