Yen weakens slightly as investors warily eye U.K. referendum

Yen weakens slightly as investors warily eye U.K. referendum
June 17 06:29 2016 Print This Article

The yen weakened against its rival currencies in Asian trade on Friday, but pared much of its earlier losses on lingering fears over the gathering momentum for Britain to leave the EU at the referendum on June 23.

The U.S. dollar USDJPY, -0.01%  advanced to as high as ¥104.84 earlier in the session before changing hands at ¥104.32. This compares with ¥104.25 late Thursday in New York.

The euro EURJPY, +0.15%  trimmed earlier gains to trade at ¥117.39 midday after touching an intraday high of ¥118.10. They compare with ¥117.04 late Thursday. The yen was also weaker, but trimmed losses against such currency peers as the U.K. pound and the Australian dollar.

After touching its 22-month low against the yen yesterday, “short covering (of the dollar) is easier to kick in,” said Yasuaki Amatatsu, senior analyst of global markets research at Bank of Tokyo-Mitsubishi UFJ.

But with investors dialing back their expectations for an early rate increase by the Federal Reserve and the yen vulnerable to come under selling pressure as haven assets, “a bunch of investors is looking for (the dollar’s) downside,” said Amatatsu.

The dollar climbed early in the morning session, as comments from Japan’s finance minister Taro Aso sparked intervention jitters among investors.

Aso toughened his currency rhetoric Friday, saying the government must prevent further progress in what he called a “one-sided, sharp and speculation-driven” appreciation of the yen. He vowed to “act more firmly than before if necessary”, against rapid yen movement.

But the greenback failed to maintain the gains after lack of clearer statements from other officials later in the morning. A top Japanese currency official told reporters that Japan’s finance ministry and the Bank of Japan had after a meeting reached a common understanding that exchange rates have been “very volatile.”

Some said the assassination of a British lawmaker, who campaigned against Britain leaving the EU, increased speculation that the Brexit is less likely, sending the pound and the euro higher. The killing prompted a temporary halt to official campaigning ahead of the referendum. But both euro and the pound trimmed much of their earlier gains by midday in a sign that the speculation was only short-lived.

n other currency-pair trading, the euro EURUSD, +0.1514%  was at $1.1251 from $1.1223.

The WSJ Dollar Index BUXX, -0.12% a measure of the dollar against a basket of major currencies, was down 0.14% at 86.30.

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Mark Winterberg
Mark Winterberg

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