Forex Market Review – Yen rises to 3-month high against dollar on safe haven demand

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The Greek debt situation dampened risk appetite as concerns grow over Greece’s delay in striking a deal with private creditors on debt restructuring. Also weighing on sentiment was rising yields on Portuguese 10-year sovereign bonds to above 15 percent, showing signs that the indebted county could run into similar trouble to Greece.

The EU Summit today failed to send a more optimistic message that Europe is getting on top of its debt crisis as European leaders disputed over austerity limits.

EURUSD extended its decline to a session low of 1.3076 in New York trading, before bouncing 1.3138, versus the Friday high of 1.3232.

The euro also hit a four-month low against the Swiss franc, falling close to the SNB floor established on September 6 at 1.20 francs. EURCHF reached 1.2039 in the US session, the lowest since September 15.

GBPUSD traded at a low of 1.5655, down from the Friday high of 1.5739, while the dollar fell to 0.9165 against the Swiss franc from 0.9207

The Canadian dollar weakened against the dollar compared to Friday, falling for the first time after a 1.1 percent gain last week.

The ICE Dollar Index, which gauges the USD against a trade-weighted basket of currencies, rose to 79.220 from 78.854 late Friday.

Against the yen however, the dollar slid to its lowest level since October 31. This is the lowest level since the Bank of Japan intervened to weaken the yen. USDJPY reached a bottom of 76.20 in the New York session. EURJPY fell 1.4 percent on the day to 99.98.

Investors turn to the safe haven yen during uncertainty the markets. Also end -of -month dollar positioning by Japanese companies are moving the dollar lower versus the yen.