FOREX-Yen gains as stocks fall in broad-based selloff

* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh

By Saikat Chatterjee

LONDON, Dec 27 (Reuters) - The Japanese yen gained half apercent against the dollar on Thursday as widening cracks inglobal stock markets prompted investors to load up on perceivedsafe-haven assets.

Though U.S. stocks jumped on Wednesday, sentiment wasdecidedly more cautious going into the U.S. trading session onThursday with European equities .STOXX falling one percentwhile U.S. stock futures ESc1 slipped more than 1.5 percent.

With concerns about a fresh chapter of trade tensionsbetween the United States and China unfolding, investors piledinto low-yielding currencies such as the Japanese yen and theSwiss franc in thin year-end trading.

"On back of the global growth concerns and the sharpturnaround in markets today we have started to see the yenregain its place as the safe-haven of choice," said Lee Hardman,a currency strategist at MUFG in London.

The yen strengthened across the board, rising more than halfa percent against the dollar JPY=EBS to 110.80 yen. Againstthe Swiss franc CHF=EBS , the dollar fell 0.44 percent at 99.14cents.

In a buying frenzy as spectacular as the recent rout, U.S.stocks soared with the Dow Jones Industrial Average .DJIA rocketing more than 1,000 points for the first time onWednesday, sending global stocks higher. MKTS/GLOB


But Thursday's session was dominated by concerns aboutfalling Chinese industrial profits, which sent bond yields inGermany lower and commodity-linked currencies such as theAustralian dollar AUD=D3 and the New Zealand dollar NZD=D3 down a quarter of a percent each.

Reuters reported on Thursday that the Trump administrationwas considering an executive order in the new year to declare anational emergency that would bar U.S. companies from usingHuawei HWT.UL and ZTE000063.SZ products.

"The oil price bounce pushed commodity currencies higheracross the board but the latest Huawei news is a bit of adampener on sentiment in these thin markets," said Alvin Tan, acurrency strategist at Societe Generale in London.

The Australian dollar AUD= , often considered a gauge ofglobal risk appetite and highly correlated to globalcommodities, was down 0.26 percent at 70.51 cents. The Norwegiancrown NOK=D3 and the New Zealand dollar NZD=D3 were alsodown a quarter of a percent each.

Broadly, the dollar failed to capitalize on an eight-dayhigh touched in the previous session on the back of firmer U.S.Treasury yields. The greenback was weaker against a basket ofits rivals in early London trading.

The dollar index .DXY , a gauge of its value versus sixmajor peers, slipped 0.2 percent to 96.82, after gaining 0.5percent on Wednesday.

Volatile markets and concerns about a slowdown in theworld's biggest economy have weighed on longer-dated U.S. bondyields and narrowed the interest rate differentials between theUnited States and other global bond markets.

Spreads between 10-year U.S. government debt US10YT=RR andcorresponding Japanese debt JP10YT=RR have shrunk by more than30 basis points to a four-month low of 2.75 percent.

(Reporting by Saikat Chatterjee; Additional reporting by SujataRao; Editing by Gareth Jones) ((saikat.chatterjee@thomsonreuters.com; +44-20-7542-1713;Reuters Messaging: saikat.chatterjee.reuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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