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Ratings agency comments weigh on sterling, euro
NEW YORK: The safe-haven yen gained broadly on Tuesday amid Japanese repatriation flows and a rise in risk aversion on concerns peripheral eurozone economies could face debt problems similar to those of Greece.
Appetite for risk had been boosted by Friday's better-than- expected US employment report, pushing the yen down to two-week lows versus the euro and the dollar.
But the change in sentiment on Tuesday after comments from Fitch Ratings on Portugal's austerity measures prompted a comeback for the yen. The dollar was supported after China said it was committed to buying US Treasuries.
"The combination of today's risk-averse trading and repatriation of yen have been the key drivers over the last 12 hours," said Camilla Sutton, currency strategist at Scotia Capital.
Further yen gains could however be limited by speculation that the Bank of Japan may take additional steps to ease monetary policy. The BOJ is in the spotlight after the Nikkei newspaper reported on Friday that the central bank was examining easing again and may decide on such a move when it meets on March 16-17.
Midway through New York trade, the dollar/yen was trading down 0.5 per cent at 89.81 yen. The yen was up 0.5 per cent against the Canadian dollar, 0.9 per cent against the Swiss franc, 1 per cent against the euro and 1.1 per cent against the pound.
The dollar index, a non traded calculation of the dollar's performance against a basket of currencies, was up 0.3 per cent at 80.649.
China, the world's biggest holder of foreign exchange reserves, renewed its commitment to the US Treasury market on Tuesday but said it would be wary of substantially boosting its gold holdings.
The pound was under widespread pressure, dropping to a one-week low versus the dollar after ratings agency Fitch said Britain's sovereign credit profile had deteriorated.
Against the dollar the pound was down around 0.5 per cent at $1.4980. The euro was down around 0.4 per cent against the dollar at $1.3579, continuing to struggle in the face of debt concerns in eurozone countries such as Greece and Portugal. -Reuters
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