US Dollar stumbles as investors seek shelter from market fallout in the yen

Tokyo-Japan (Jan 15)  The dollar fell around 0.8% against the yen on Friday as a resumed global market selloff sent investors running for cover in the perceived safety of the Japanese yen.

The dollar USDJPY, -0.63%  dropped to ¥117.32 compared with ¥118.08 late Thursday in New York. The dollar also fell against the euro EURUSD, +0.4325% with the shared currency rising to $1.0910 from $1.0865.

Weakness for the greenback came amid heavy fresh losses for crude oil CLG6, -5.51% which dropped below $30 a barrel in morning European trading hours. Markets fretted that international sanctions against Iran could be lifted as soon as this weekend, likely leading to a gush of Iranian oil exports.

Further rattling investor nerves, China stocks reached bear-market territory on Friday. U.S. stock futures hinted of triple-digit losses for the Dow industrials at the open of trade later.

The yen remains sensitive to equities “the same as always,” said Daisaku Ueno, chief FX strategist at Mitsubishi UFJ Morgan Stanley.

“The yen weakens when higher stocks loosen tolerance for risk, but the yen strengthens when stocks fall. We are seeing a repeat of this pattern,” he said.

Ueno said investors are now sitting on the sidelines ahead of economic data from China, including October-December gross domestic product and December industrial output, scheduled for Tuesday.

The Japanese currency gathered strength against the euro EURJPY, -0.21% which fell to ¥128.06 from ¥128.27. The Australian dollar AUDJPY, -2.24%  fell to ¥80.64 from ¥83.72.

The WSJ Dollar Index BUXX, +0.17% a measure of the dollar against a basket of major currencies, was up 0.07% at 91.21.

Source: MarketWatch