Yen in demand as risk aversion grows, loonie hits fresh lows

SYDNEY: The safe-haven yen got off to a flying start on Monday, while the Australian dollar, usually sold off in times of market stress, stayed under pressure as Asian equities geared up for a torrid session following a big selloff on Wall Street.

Investors also took aim at the Canadian dollar, driving it to a near 13-year low around C$1.4650 on growing expectations the Bank of Canada will cut interest rates as early as this week.

U.S. stocks sank to their lowest since October 2014 as oil prices slid below $30 per barrel and fears grew about the health of the Chinese economy. A batch of disappointing U.S. data, including a fall in retail sales, added to worries about the global economy.

In response, currency investors bought the safe-haven yen, driving the Japanese unit higher against most peers.

The dollar slid to 116.56 yen, from 117.10 late in New York. A break below 116.15 - its August trough - will take the greenback back to one-year lows. It last stood at 116.77.

The euro dipped to a one-week low of 127.48 yen, while the Aussie dollar was pinned near Friday's three-year trough of 79.52 yen.

Against the U.S. dollar, sterling languished at a 5-1/2 year low below $1.4300, while the Aussie was a whisker away from a seven-year low of $0.6827 set on Friday.

The outlook for commodity currencies, particularly the loonie, remained bleak given expectations for further weakness in oil prices.

Iran is set to add to the global oversupply woes as it gears up to re-establish its crude oil export program after crippling sanctions were lifted over the weekend.

"Sustained weakness in the price of oil continues to weigh on the Canadian economy. The BoC would need to cut at least 50 bp this year to partially counteract the continued slide in crude oil prices," analysts at Barclays wrote in a note to clients.