Yen gains as political worries stoke safe-haven bids

Fri Feb 17, 2017 2:49pm EST
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By Richard Leong

NEW YORK (Reuters) - The yen rose against major currencies on Friday as concerns about the upcoming French elections and the lack of movement in fiscal changes in the United States kindled safe-haven demand for the Japanese currency.

The dollar improved versus most peers with the exception of the yen, chalking up a second week of gains following a mildly hawkish view from Federal Reserve Chair Janet Yellen and surprising strong U.S. data on retail sales and consumer prices.

"We are trading in this political policy vacuum," Mazen Issa, senior FX strategist at TD Securities in New York, said of the dollar. "We are going to see things whipsaw around."

Weaker stock prices around the globe, together with a three-day U.S. holiday weekend, further fed appetite for the yen, bonds and other less risky assets.

The yen was up 0.3 percent against the dollar at 112.87 yen JPY= and was 0.9 percent higher versus the euro at 119.78 yen EURJPY=.

News the French left could unite behind one candidate in presidential elections, possibly knocking centrist and right-leaning nominees out of the race in the first round, raised a new scenario for a second-round runoff. This possible alliance could increase the chances of anti-EU, anti-immigrant Marine Le Pen winning the presidency.

In the wake of this political development, the euro fell 0.6 percent against the dollar at $1.0612 EUR=, holding above a five-week low of $1.0520 struck on Wednesday.

The euro's weakness helped stabilize the dollar as traders had pared bullish bets on the greenback earlier this week on reduced expectations the Federal Reserve will raise interest rates in March.   Continued...

Light is cast on a U.S. one-hundred dollar bill next to a Japanese 10,000 yen note in this picture illustration shot February 28, 2013.   REUTERS/Shohei Miyano/Illustration/File Photo