USD/JPY Lower as Flight to Safety Boosts Yen

The yen headed for its biggest two-day advance in three weeks against the dollar as a slump in oil and stocks stoked demand for Japan’s haven assets.

The yen climbed to the strongest in nine weeks versus the euro as Greece prepares for an election that the country’s leader said may lead to it exiting the currency union. Norway’s krone slumped to a three-week low as a report showed manufacturing in western Europe’s biggest oil producer shrank. The ruble tumbled as the cost of insuring Russian bonds against default rose to the highest level in almost six years on concern a cut in the nation’s credit rating to junk was imminent.

The yen’s gain “is primarily due to the global risk-aversion,” said Alvin T. Tan, a foreign-exchange strategist at Societe Generale SA in London. “Dollar-yen ended the year relatively bid. It’s come off as global equities and bond yields have fallen.” He also pointed to oil prices, “and of course there’s a bit of worry about the Greece thing.”

The yen advanced 0.4 percent to 119.18 per dollar as of 7:35 a.m. New York time, extending its gain in the past two days to 1.1 percent, the most since the period ended Dec. 16. Japan’s currency gained 0.8 percent to 141.70 per euro after reaching 141.38, the strongest since Nov. 3. The dollar strengthened 0.4 percent to $1.1889 per euro.

Crude oil futures tumbled 5 percent yesterday in New York and slid below $50 for the first time since April 2009. to as low as $48.47 a barrel today. The price fell as much as 3.1 percent more today, set for a fourth day of declines. The MSCI Asia Pacific Index (MXAP) of shares sank 2 percent and the MSCI All-Country World Index slid 0.4 percent, in a fifth day of drops.

via Bloomberg

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.