Tokyo, Japan (BBN)-The dollar was lower against the yen and the euro in Asian trade Monday, with weakness in Asian stock markets again prompting flights to the perceived safety of the Japanese and eurozone currencies.
Around 0450 GMT, the greenback was at Y120.99, compared with Y121.70 late Friday in New York, reports The Wall Street Journal.
The US currency was also weaker against the euro, which rose to $1.1258 midday from $1.1187.
The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was down 0.26 per cent at 88.24.
Despite comments from the US Federal Reserve’s No. 2 official over the weekend, interpreted as being slightly hawkish by Tokyo-based currency dealers and analysts, the greenback was under selling pressure against the yen and the euro from earlier in the session.
Market participants pointed to a Financial Times report that China will avoid massive share purchases after an over $200 million two-month spree to support stocks, which sparked concerns about another round of a stock market sell-off.
Then, later in the session, both Tokyo stocks and China stocks opened lower, intensifying the risk-averse mood after a China-induced global stock market sell-off just a week ago.
In Tokyo, the Nikkei Stock Average was down 1.6 per cent midday at 18831.66, on track to close lower after a three-day winning streak.
After opening weaker again, the Shanghai Composite Index was recently trading 2.6 per cent lower.
In times of stress such as stock market instability, investors seek refuge in traditional safe harbor currencies such as the yen.
The euro is also being perceived as a safe haven, rallying to a seven-month high of $1.1713 early last week at the height of the global markets rout.
“The market has turned into a risk-off mood,” said Mizuho Securities’ chief foreign-exchange strategist, Kengo Suzuki.
Investors will focus on China’s manufacturing data for August scheduled to be released Tuesday and events such the G-20 finance ministers’ meetings in Turkey, with focus shifting later in the week to the US jobs data due Friday, said Suzuki.
Resource-related, risk-sensitive currencies such as the Australian dollar were sold on stock market weakness.
The Australian dollar dropped to $0.7147 and Y86.46 midday from $0.7172 and Y87.27, respectively.
The New Zealand dollar weakened to $0.6425 and to Y77.74 from $0.6463 and Y78.66, respectively.