stocks underpin yen and Swiss franc; dollar subdued
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[July 21, 2014]
By Anirban Nag
LONDON (Reuters) - The yen and Swiss
franc climbed on Monday, supported by safe-haven inflows as European
stocks stumbled, while the dollar was pegged back against the euro
by subdued U.S. yields.
Volumes were light though, due to a holiday in Japan. Germany's
stock index <.GDAXI> fell to a two-month low, helping the yen and
the Swiss franc, which are often sought during times of financial
market stress and uncertainty over growth.
The euro eased against the yen to 136.89 yen <EURJPY=R> in the
European session, not far from a five-month low of 136.66 yen hit
late last week. It also slipped against the Swiss franc <EURCHF=> to
trade at 1.2147 francs.
However, the common currency held its ground against the dollar,
trading steady at $1.3525 <EUR=> and staying well above Friday's
five-month low of $1.3491. Support is seen at $1.3460/80, an area
that has provided a floor on several occasions in the past 10 months
The dollar was also slightly lower at 101.30 yen <JPY=>, with dollar
bulls increasingly frustrated by U.S. yields, which were anchored
near recent lows. The dollar also fell against the Swiss franc <CHF=>.
"Growth in the U.S. is soft and rate hikes are further away," CIBC
World Markets currency strategist, Patrick Bennett, said. "So the
recent ranges that have held in the euro/dollar should be
The downing of a Malaysian airliner in eastern Ukraine last week and
fighting in Gaza continued to dominate the headlines, with investors
keeping a wary eye. But traders and analysts said these events had
not led to panic, for now. Nevertheless, they kept a bid tone on
traditional safe-haven currencies.
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"Layered on top of the prevailing geopolitical risks and the
adjustments to Bank of Japan policy expectations, there would appear
to be good reason to expect the yen to maintain a firm profile near
term," Rabobank senior currency strategist Jane Foley said.
Last week, the BoJ gave upbeat signals on the Japanese economy and
few hints about more monetary easing.
Morgan Stanley put out a "sell" recommendation on the euro/yen. They
expect the BoJ keep rates on hold for now, while the European
Central Bank is expected to be accommodative given low inflation.
They target euro to drop to 132.50 yen.
(Additional reporting by Ian Chua in Sydney; Editing by Louise
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