Yen stands tall against dollar, euro, as global equities extend losses
Tokyo: The yen stood tall against the dollar and euro on Tuesday as a continuing selloff in global equities suppressed investor appetite for risk and kept the safe-haven yen in demand.
The dollar slipped 0.1 per cent to 119.32 yen after losing as much as 0.7 per cent overnight, when it plumbed an 11-week low of 118.705. The euro was down 0.1 per cent at 129.23 yen after sinking to an eight-month trough of 128.69 overnight.
Global equities dropped sharply on Monday after a 7 per cent slide in Chinese stocks triggered by weak economic indicators rekindled concerns over global growth. Risk sentiment remained fragile, with MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropping 0.3 percent early on Tuesday.
"The Japanese yen could outperform amid a continued retreat in expectations for further near-term BOJ (Bank of Japan) easing. This would leave the currency well positioned to benefit from any softer US data flow or rise in risk aversion. Tactically we favour USD/JPY shorts," wrote currency strategists at CitiFX.
The yen also stands to benefit against the dollar should Chinese stock market weakness continue and dent expectations centred on the Federal Reserve hiking interest rates for a second time after tightening last month - the first time in nearly a decade.
The Australian dollar, which took a heavy knock overnight due to its status as a proxy of China-related trades, extended losses. The Aussie was down 0.1 per cent at $0.7184 after tanking 1.3 per cent on Monday. The New Zealand dollar was also bruised, down 0.1 per cent at $0.6745 after an overnight fall of 1.1 per cent.
The Canadian dollar wobbled as crude oil prices pared earlier gains and fell on Tuesday, with worries about China overcoming an earlier rally supported by Middle East tensions. The dollar stood little changed at C$1.3884 after surging 0.9 per cent against the loonie overnight.
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