The yen rallied to a four-month high versus the euro after the worsening crisis in Iraq spurred bets that global crude supplies will be affected, boosting demand for safe haven assets.
The Japan’s currency advanced 0.3 percent to 137.77 a euro at 9:30 a.m. in London after earlier rising to 137.71, its highest mark since February 6. The yen surged 0.2 percent to 101.89 a dollar, while the euro lost 0.1 percent against the dollar to $1.3522, extending its last week’s 0.8 percent decline.
“The yen is strengthening due to the geopolitical tensions that are pushing prices of some commodities higher and stocks lower,” Neil Jones, a London-based head of hedge-fund sales at Mizuho Bank Ltd told Bloomberg. “The Japanese currency has a safe-haven element to it and generally performs well when the market perceives that there is a risk-off scenario.”
The yen rose against 16 major counterparts after the Iraq government forces launched an offensive to reclaim regions north of Baghdad captured by Sunni Muslim militants. The Japan’s currency has rallied 3.1 percent in 2014, making it the third-best performing currency among the 10 advanced-economy currencies monitored by Bloomberg Correlation-Weighted Indexes. The euro has shed 2.4 percent while the dollar has lost 0.7 percent.
The euro tumbled for the sixth time within seven days versus the yen over speculation that the declining inflation rate will force the European Central Bank to boost stimulus. The euro area statistics office is expected to release final inflation data for May, with economists forecasting that inflation rose by 0.5 percent, down from 0.7 percent in April. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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