Euro, Yen, Franc Hold Gains as Bid for Haven Currencies Returns

  • Shared currency climbs versus most of its 16 main peers Monday
  • Yen, Swiss franc keep rally after oil exporters posted losses

The euro held its first gain in four days as declining oil and stocks led currency traders to renew a bid for haven assets.

The shared currency climbed with the yen and the Swiss franc on Monday as investors unwound overseas bets funded in those currencies and channeled cash into government bonds. The dollar had rallied versus the currencies of oil exporters, including Canada and Mexico.

Traders are jittery ahead of central-bank meetings in the U.S., Japan and New Zealand, amid speculation that policy makers will be forced to address the volatile start to the year. Foreign-exchange price swings rose to the highest since September last week, before moderating on Jan. 22, a JPMorgan Chase & Co. gauge shows.

“With the cautious market mood today, that’s helping the funding currencies -- the euro, the Japanese yen, the Swiss franc -- it’s also restraining the commodity and more risk-sensitive currencies,” Eric Viloria, a strategist at Wells Fargo & Co. in New York, said Monday. “When the economic fundamentals and when monetary policy comes back into focus, that should see a continuation of some of the trends we saw last year.”

The euro was little changed at $1.0852 as of 8:20 a.m. in Tokyo on Tuesday, after gaining 0.5 percent in New York. The yen was at 118.34 per dollar from 118.30, following a 0.4 percent climb on Monday. Australia’s markets are closed for a national holiday.

Haven Demand

The Swiss franc was at 1.0126 per greenback from 1.0128 on Monday, when it rose 0.3 percent. Canada’s dollar and the Mexican peso were little changed on Tuesday, after dropping 1.2 percent and 0.9 percent on Monday, respectively.

The Federal Reserve meets Jan. 26-27. The Reserve Bank of New Zealand announces its next policy decision on Jan. 28, while the Bank of Japan gathers Jan. 29. All dates are local.

“There’s a lot of questions and lots of uncertainty,” Bipan Rai, director of foreign-exchange strategy at Canadian Imperial Bank of Commerce’s CIBC World Markets unit, said from Toronto on Monday. For the euro, “part of the reason why it’s outperforming today just could be the risk-off tone to the market, as the euro zone still has a wide current account surplus and there’s lots of liquidity,” he said, adding that traders are cautious about the prospect of further easing in Europe.

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