Yen weakens; US dollar mixed

Yen weakens; US dollar mixed

Story link: Yen weakens; US dollar mixed

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The yen weakened in London trade on Monday as the Japanese currency fell back from gains late last week after China raised interest rates and slightly eased controls on its currency. After falling to a new low of ¥163.94 versus the shared currency in the morning session, it recovered slightly to trade at ¥163.75 by around the middle of the session, still 0.1 percent lower on the day so far. The yen was also down versus the US dollar, falling 0.2 percent to ¥121.35.

The yen was initially up after China’s moves on Friday as investors assumed that they would cut the appetite for risk and cut selling of the yen to finance carry trades. However, a rally by the Chinese equities market was reassuring and investors once again were willing to enter more risky carry trades. In the final analysis, most economists don’t believe that the hike in Chinese interest rates and the renminbi’s wider trading band against the dollar will have much effect on the global currencies market.

The greenback was mixed otherwise in London trade as it remained about even versus the euro at $1.3500, while it added 0.1 percent to $1.9716 in relation to sterling. However, the Canadian dollar added 0.4 percent versus the US dollar, to C$1.0840, after a recent string of positive economic data in Canada as well as several rumored takeovers of Canadian companies.