Yen slides to five-week lows as risky bets thrive

Illustrative picture shows Japanese 10,000 yen bank notes spread out at an office of World Currency Shop in Tokyo, August 9, 2010. — Reuters pic
Illustrative picture shows Japanese 10,000 yen bank notes spread out at an office of World Currency Shop in Tokyo, August 9, 2010. — Reuters pic

LONDON, Sept 10 — The Japanese yen fell to a five-week low against the US dollar today as a rebound in government bond yields prompted some investors to cut back on bearish bets on the global economy.

Germany’s 30-year bond yield rose into positive territory for the first time in more than a month. Benchmark US Treasury yields rose to three-week highs as investors ventured into riskier assets.

“What we are seeing now is a reversal of some of those investment flows in the summer,” said Lee Hardman, a currency strategist at MUFG in London.

Against the dollar, the yen fell to a five-week low of 107.50 yen, its weakest since early August.

Recent data has lifted some of the gloom over the global economy. Citi’s economic-surprise indices for the United States turned positive in the past week for the first time since February. The UK equivalent turned positive for the first time since June. The G10 aggregate index is on the cusp of flipping into the black and is at its highest in a year

“Over the past 24 hours there has been a move towards more risk-friendly, pro-growth currencies,” Rodrigo Catril, senior FX strategist at National Australia Bank in Sydney.

The euro was flat at US$1.104. It reached an overnight high of US$1.1067 after a Reuters report that Germany may set up public-investment agencies to boost fiscal stimulus without breaching national spending rules.

The Swedish crown was the only notable loser in early London trading, falling 0.5 per cent versus the dollar and 0.7 per cent against the euro, after August inflation data came in below market expectations.

Sterling was steady as Britain’s parliament voted to block Prime Minister Boris Johnson’s bid for an early election, which pushed him to promise he would secure a Brexit deal at a European Union summit next month. — Reuters

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