Yen rises in New York

Investors seeking safety drove the yen to multi-week highs against the dollar and the euro on Tuesday as rising Spanish and Italian bond yields underscored worries about the global economy and the Bank of Japan (BoJ) said it was not considering more monetary stimulus.
Investors fled from assets perceived as riskier, such as the euro and equities, on worries that global growth could remain sluggish as the eurozone continues to struggle with its persistent debt crisis. The euro fell to its lowest against the yen in nearly seven weeks, flirting with its biggest single-day loss against the Japanese currency in five weeks.
The dollar touched a better than one-month low against the yen, tracking its fifth straight session of losses. "Spain is in the crosshairs a bit more," said Fabian Eliasson, vice president of currency sales at Mizuho Corporate Bank, adding that the Bank of Japan decision not to ease policy further helped drive investors toward the yen. Further increasing the appeal of safe havens such as the yen and US Treasuries, Spanish bond yields rose to within a whisker of 6 percent and German Bund yields equaled their lowest-ever levels on Tuesday, reflecting worries about the eurozone's sovereign debt crisis. "The yen has been getting a little bit of juice as a safe haven, with European equities getting crushed overnight," said John Doyle, currency strategist at Tempus Consulting in Washington, D.C.
The dollar sank as low as 80.65 yen, its weakest since early March, according to Reuters data. The greenback more recently traded at 80.70 yen, eroding support at the 50-day simple moving average of 80.78 yen. The euro also slumped against the yen, hitting an almost seven-week low of 105.47 yen before recovering slightly to trade off 1.22 percent to 105.52.
The euro fell against the dollar despite briefly trading flat against the greenback earlier in the session. The eurozone single currency lost 0.18 percent to $1.3076. Spanish bonds have come under pressure recently as investors worry Spain could become the next source of contagion in the eurozone due to its weak fiscal position. Uncertainly about the prospects for the euro has fallen somewhat as reflected in the options market, with three-month risk reversals in the euro/dollar still biased for euro puts, trading at -2.15 vols on Tuesday, but improving from -3.5 vols in mid-February. Euro/yen three-month risk reversals remained biased for euro puts, trading at -3.5 vols, down from -3.68 vols in early March.