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USD Weaker As JPY Strengthens on Safe Haven Flows
09/29/2015 9:00 am EST
OANDA senior currency strategist Alfonso Esparza explains that the USD eased on Monday as the Japanese yen rallied and he strengthens his point by pointing out that the yen has been a traditional safe haven in the currency market—along with the Swiss franc—gaining during times of economic uncertainty or stress in financial markets.
The dollar eased on Monday as the yen rallied amid drooping global stock prices and anxiety over potentially market-rattling economic data due this week from China and the United States.
Europe’s main bourses fell as a 25% slump in miner Glencore and a drop in Volkswagen shares added to a glum mood in markets.
Wall Street was off more than 1% and the MSCI world equity index fell 5.33 points, or 1.39%, to 378.97.
“Risk aversion is driving trade and, if we see some more signs of weak Chinese data later this week, we could see increased buying of the yen,” said a London-based spot trader.
The dollar, which advanced broadly last week—as US Federal Reserve Chair Janet Yellen boosted expectations for US interest rate hikes—was down 0.6% at 119.88 yen. The euro, too was lower by a similar margin at 134.08 yen.
The dollar index was last off 0.07% after trading ahead before US data showed an unexpected decline during August of contracts to buy previously owned US homes. The data indicated the robust housing market could be losing steam.
The yen has been a traditional safe haven in the currency market, along with the Swiss franc, gaining during times of economic uncertainty or stress in financial markets. The dollar was off 0.30% against the franc.
By Alfonso Esparza,Senior Currency Strategist, OANDA
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