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FOREX-Yen near 7-mth high vs dollar; Hong Kong, Argentina woes fuel risk aversion

Published 13/08/2019, 11:08 am
© Reuters.  FOREX-Yen near 7-mth high vs dollar; Hong Kong, Argentina woes fuel risk aversion
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* Yen testing January high as global tensions heighten

* Hong Kong unrest, Argentina market rout add support to yen

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Shinichi Saoshiro

TOKYO, Aug 13 (Reuters) - The yen stood near a seven-month high against the dollar on Tuesday as unrest in Hong Kong and gyrations in Argentina's markets heightened investor risk aversion and fanned demand for the safe-haven Japanese currency.

The yen traded at 105.400 per dollar JPY= after brushing 105.050 overnight, its strongest since Jan. 3.

The yen has been on a solid footing this month, supported by factors such as U.S.-China trade tensions and the prospect of further monetary easing by the U.S. Federal Reserve.

The currency has received a fresh boost from deepening unrest in Hong Kong, where the international airport was closed to flights for several hours on Monday amid ongoing demonstrations. Surprise primary election results in Argentina, which resulted in a rout in the country's peso currency, stocks and bonds, have also added support. the 'risk off' in the market generated by events in Hong Kong and Argentina that is feeding demand for the yen," said Yukio Ishizuki, senior currency strategist at Daiwa Securities. "Speculators are increasing their long positions on the yen."

"There really are no signs of the yen's advance abating," Ishizuki added. "The next target is the yen's high reached against the dollar early in January, but even that threshold won't present much of an obstacle at this rate."

The Japanese currency has gained for the past four trading days against the greenback. A move beyond 104.100, this year's high scaled at the start of January, would take the yen to its highest level since November 2016.

The euro EUR= was little changed at $1.1215.

The single currency held modest gains made the previous day after Italian bond yields pulled back from five-week highs on relief that rating agency Fitch left the country's credit rating unchanged. Australian dollar AUD=D3 crawled up 0.15% to $0.6760.

The Aussie had lost 0.5% the previous day, slipping in sympathy with the Chinese yuan CNH= amid little sign of progress in U.S.-China trade relations. The Aussie is sensitive to developments in China, Australia's largest trading partner.

Argentina's peso ARS= ended trade on Monday at 52.15 per dollar for a loss of roughly 15% after falling to an all-time low of 61.99. of a possible return to interventionist policies, and by extension a possible debt default, gripped the market after conservative Argentina President Mauricio Macri lost by a much wider-than-expected margin to the opposition in presidential primaries.

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