The Japanese yen moved higher in quiet trading in Monday’s Asian session as Japanese markets were closed for a national holiday. Lower oil prices gave rise to increased risk aversion on the week’s first day of trading, helping the yen advance.
The dollar slipped to 111.45 yen in late session, not far from its recent 17-month lows. But against other currencies, the dollar was broadly stronger. The euro continued to slide on Monday but managed to hold above 1.12 dollars. The single currency came under pressure on Friday after the ECB’s Chief Economist Peter Praet signalled that interest rates have not yet reached the lower bound. The euro was last trading at 1.1251 dollars.
Meanwhile, political developments in the UK triggered a sharp slide in the pound, which dropped just below 1.44 dollars on Monday, having rallied above 1.45 dollars last week. The resignation of Iain Duncan Smith, a Eurosceptic senior cabinet minister, from the government prompted fears that it would damage David Cameron’s leadership and harm the campaign for Britain to stay in the EU. Sterling was also down against the euro and the yen at 0.7820 per pound and 160.35 yen.
Crude oil prices went into reverse late on Friday after touching 3½-month highs. US oil futures peaked at $42.47 a barrel on Friday but a surprise increase in the US oil rig count heightened concerns that the recent rally may have been overdone. The latest Baker Hughes oil rig count showed there was an increase of 1 rig to 387 rigs in the week ending March 18. WTI futures were last trading at $40.46 a barrel in late session
Weaker commodity prices put pressure on the Australian, New Zealand and Canadian dollars, which came off last week’s highs. The aussie and the kiwi were down at 0.7586 and 0.6760 respectively against the US dollar, while the greenback reclaimed the 1.30 level versus the loonie.
Looking ahead to the rest of the day, it will be relatively quiet on the data front with only Eurozone current account figures and the latest existing home sales numbers from the US to keep traders busy. A speech by Atlanta Fed President Dennis Lockhart later in the day may also attract some attention.