Tuesday 03 Oct 2023
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LONDON (April 11): The safe-haven yen rose broadly in European trading on Tuesday, as investors considered a spectrum of risks including possible US action in Syria and North Korea, and a resurgence in previously written-off contenders in France's presidential race.

The possibility of some kind of US military action against North Korea in response to its weapons tests grew after US missile strikes against Syria last week in retaliation for a chemical weapons attack on civilians.

The US dollar extended earlier losses against the Japanese currency, slipping 0.4% to 110.54 yen, moving further away from its previous day's high of 111.57 yen.

The dollar index, which gauges the US currency against a basket of six major peers, was slightly higher on the day at 100.98.

"The dollar rally we've seen over the past week may be a bit overdone considering the risks we're still facing," said Thu Lan Nguyen, currency analyst with Commerzbank in Frankfurt.

China and South Korea agreed on Monday to impose tougher sanctions on North Korea if it carries out nuclear or long-range missile tests, a senior official in Seoul said, as a US Navy strike group headed to the region in a show of force.

"The market has become more cautious about (US) policies, with attention to increased risks," said Harumi Taguchi, principal economist at IHS Markit in Tokyo. "The yen is easy to buy in such situations."

Investors were also weighing the increased uncertainty of what is now increasingly seeming like a four-way contest in France's presidential election.

Opinion polls indicate far-right candidate Marine Le Pen and centrist Emmanuel Macron will come out ahead in the April 23 first round and make it to the May 7 run-off, with Macron winning. But leftist Jean-Luc Melenchon has seen his ratings surge and conservative Francois Fillon, damaged by a nepotism scandal, has also regained some lost ground.

The euro fell to a four-month low versus the yen, falling as much as 0.4% to 116.880 yen in morning trade in London. .

Against the US dollar it was 0.1% lower at US$1.0592


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