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FOREX-Yen gains broadly as Brexit concerns grow

Published 15/06/2016, 12:21 am
© Reuters.  FOREX-Yen gains broadly as Brexit concerns grow
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* Yen climbs to highest since January 2013 vs euro

* Pound hovers just above two-month low vs dollar, euro

* Swiss franc also gains as investors seek safe havens (Adds comment, U.S. data, updates prices, changes byline, dateline; previous LONDON)

By Gertrude Chavez-Dreyfuss

NEW YORK, June 14 (Reuters) - The yen surged to its highest in more than three years against the euro on Tuesday as chances of Britain voting next week to leave the European Union grew, prompting a flight to safe havens such as the Japanese currency.

The yen also hit a six-week high versus the dollar and a nearly three-year peak against sterling.

The dollar trimmed its losses against the yen slightly after a strong U.S. retail sales report for May, although the data did little to increase the odds of an interest rate hike by the Federal Reserve in the summer.

The U.S. data's impact was muted, with the market generally preoccupied by Britain's future in the EU.

As opinion polls continued to show the "Leave" camp moving ahead before the June 23 vote, and Britain's biggest selling paper, the Sun, came out in favor of leaving the bloc, sterling fell to a two-month low of $1.4112 GBP= .

"Brexit worries as well as nagging concerns about the health of the global economy have prompted many investors to shun risk and ride out this period of uncertainty in the relative safety of yen assets," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

The Swiss franc, another traditional harbour in times of global financial stress, hit a three-month high against the euro EURCHF= , and the dollar gained against the euro and a basket of currencies. .DXY EUR=

In mid-morning trading, the euro was down 1.0 percent against the yen at 118.84 EURJPY= , while the dollar slid 0.3 percent to 105.98 yen JPY= .

Ahead of this week's Bank of Japan meeting, traders said strong resistance around 105.50 has kept the yen from surging towards 100 per dollar, the level many assume would force Japan to intervene against its currency.

The debate now among traders is whether the BoJ will take policy steps on Thursday aimed at weakening the currency, when a vote for a Brexit next week would be expected to drive more yen buying as a safe haven for capital.

"While it remains unlikely that the BoJ will act when it meets this week, the risk of policy action in the weeks ahead remains high," Commonwealth's Esiner said.

The dollar got back above 106 yen after data showed U.S. retail sales increased 0.5 percent last month following an unrevised 1.3 percent surge in April.

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