SINGAPORE: The dollar fell to a one-month low against the yen on Monday, as heightened worries about the health of the global economy continued to shore up the safe-haven Japanese currency. The dollar also slipped versus the euro and the Australian dollar in choppy, holiday-thinned trade.
The greenback struggled to gain traction in the wake of its broad drop last week after the dovish-leaning minutes of the US Federal Reserve's September meeting prompted the market to push back the expected timing of a Fed rate hike.
Contributing to the dollar's recent decline against the low-yielding yen have been worries about global growth, which have reduced risk appetites and triggered a broad selloff in equities.
A drop in US equities futures on Monday provided broad support for the yen, said Jeffrey Halley, FX trader for Saxo Capital Markets in Singapore. "It's definitely a risk-off move and we will have reduced liquidity with the US and Japan on holiday today," Halley said.
Japanese markets are closed for a public holiday on Monday. In the United States, the bond market will be closed for a holiday although the stock market will be open.
The dollar was down 0.5 percent to 107.17 yen, after falling as low as 107.06 yen, its weakest level in about a month and well off a six-year high of 110.09 yen on Oct. 1. "There's no clear-cut direction at the moment. It's still back and forth.
I think overall the long dollar position is going to win out, over time," said Stephen Innes, senior trader for forex retail broker OANDA in Singapore.
Federal Reserve officials on Saturday took stock of a slowdown in the global economy and said it could, if serious enough, delay an increase in US interest rates.
JITTERY MARKET
Since investors often sell the low-yielding yen in carry trades to fund their investment in higher-yielding currencies and assets, the yen tends to get a boost if a worsening of risk sentiment triggers an unwinding of such bets.
In a sign of the jittery market mood, Wall Street's fear gauge, the CBOE Volatility Index, touched a near two-year high of 22.06 on Friday. Earlier on Monday, the yen rose to its highest level in about 11 months against the euro and scaled a six-month high versus the Australian dollar.
The yen, however, later came down from such highs. The euro last traded at 136.02 yen up 0.1 percent on the day. Earlier, the euro fell to 135.56 yen, its lowest level versus the yen since last November.
Against the dollar, the euro rose 0.5 percent to $1.2693.
The Australian dollar gained 0.6 percent to $0.8734.
The Aussie rose 0.1 percent to 93.58 yen, having hit a low of 92.82 yen earlier on Monday, its lowest level since late March.
The Aussie dollar touched its intraday highs versus the dollar and the yen after data showed that both Chinese exports and imports exceeded market expectations in September.
The Aussie dollar is sensitive to data out of China, the biggest buyer of Australian commodity exports.
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