Yen Rallies to a Two-Month High as Investor Seek Refuge in Havens

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Yen Rallies to a Two-Month High as Investor Seek Refuge in HavensThe yen rallied to its highest level against the US dollar in two months after anti-China protests in Vietnam and Ukraine tensions spurred demand for safe haven assets.

The Japanese currency surged 0.1 percent to 101.43 a dollar in early morning trading in London. It touched 101.24, its highest March 17. The yen remained slightly unchanged at 139.12 per euro after earlier jumping to 138.78 last Friday, its most since February 12. The euro edged 0.2 percent up to $1.3718, after earlier declining to $1.3648, the weakest since February 27.

The yen was helped by weaker 10-year U.S. Treasury bonds, which hovered near their lowest point in seven months.

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“Demand for U.S. Treasuries will continue to be supported by risk aversion limiting the upside in dollar-yen,” Toshiya Yamauchi, a Tokyo-based senior analyst at margin trader Ueda Harlow Ltd, told Bloomberg. “There is uncertainty surrounding presidential elections in Ukraine and rising tensions between China and Vietnam. It’s not an environment where investors want to aggressively take risks.”

U.S. Labor department is expected to release data on new unemployment claims this week (May 22), with analysts estimating that it rose to 310,000 in the week ended Saturday, up from the previous week’s figure of 297,000. Federal Reserve Chair Janet Yellen is expected to give a speech at commencement ceremony at New York University. On May 21, the Fed is also expected to announce the minutes of its April’s meeting.

The dollar has been hit hard by Friday’s report that U.S. consumer confidence fell in May. The preliminary sentiment gauge, which is compiled by Thomson Reuters and University of Michigan, fell from 84.1 in April to 81.8. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com