Yen rises as risk aversion increases; Australian dollar touches 3-week low

Japanese Yen

The Japanese yen, a perceived safe-haven, went up broadly on Tuesday as a mood of risk-aversion permeates through the broader markets, while the Australian dollar dropped to a three-week low after the country’s central bank raised concerns about the conditions of domestic labor.

Investor appetite for risk has been worn out this week due to multiple factors including an anxious wait for an upcoming meeting between Xi Jinping, China’s President and Donald Trump the the President of the United States and a suspected suicide bombing at St. Petersburg, Russia.

"The dollar is feeling pressure against the yen from an interest rate spread point of view, with Treasury yields having fallen to one-month lows as Wall Street despite decent data," senior strategist at Barclays in Tokyo, Shin Kadota said.

The dollar extended its overnight losses and lost 0.4 percent at 110.440 yen after hitting 110.370, its lowest in a week.

"This is a case of negative mood prevailing over other factors, like positive data, which would otherwise support the dollar," said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.

"It is difficult to pinpoint the cause of the negative mood, but it won't go away until immediate concerns towards the Trump administration are soothed. That might not take place until the U.S.-China summit is out of the way."

After a mere 0.2 percent gain, the euro was steady at $1.0667 against the dollar.

The Australian dollar lost more than 0.3 percent to touch its three-week low of $0.7678 having dropped steadily over the past two weeks from a four-month high of $0.7750.

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