US Dollar, Yen Weaken Amid Risk Appetite As UK Voting Gets Underway

CANBERA (Alliance News) – The US dollar and the Japanese yen drifted lower against their key counterparts in European trading on Thursday, as voting got underway in Britain, with investors optimistic that the UK will vote to remain in the EU in the referendum.

Demand for safe-haven currencies such as the dollar and the yen waned amid risk appetite, after two new polls suggested the Remain campaign has taken the lead in Britain’s referendum on EU membership. A ComRes poll for the Daily Mail and ITV showed a six point lead for Remain, while a YouGov poll for The Times put Remain on 52% against 48% for a Leave vote.

Voting began at 7 a.m. London time and the final results will be out on Friday.

In her second day of semiannual monetary policy testimony, the Fed Chair Janet Yellen reiterated a cautious and uncertain outlook on economy, led by economic headwinds at home and overseas. She didn’t offer any signal on when the Fed will next raise interest rates.

Investors await the release of weekly jobless claims, new home sales and the leading economic index due shortly. Durable goods orders and consumer sentiment will be out tomorrow.

The greenback has been lower against most major rivals in Asian deals, while the yen was trading mixed. The yen has been weaker against the pound and the euro, but higher against the franc.

In European deals, the greenback fell to a 1-1/2-month low of 1.1421 against the euro, after having advanced to 1.1294 at 5:00 pm ET. The greenback is seen finding support around the 1.15 mark.

Flash survey results from Markit showed that Eurozone private sector activity expanded at the weakest pace in 17 months in June.

The flash composite output index dropped to 52.8 in June from 53.1 in May. This was the lowest reading since January of last year.

The greenback declined to near a 2-month low of 0.9521 against the franc and more than a 6-month low of 1.4947 against the pound, off its early highs of 0.9601 and 1.4697, respectively. If the greenback extends decline, it may locate support around 0.93 against the franc and 1.51 against the pound.

Continuing early slide, the greenback fell to more than a 1-year low of 0.7254 against the kiwi and near a 2-month low of 0.7597 against the aussie. The greenback is likely to find support around 0.74 against the kiwi and 0.77 against the aussie.

The greenback reversed from an early high of 1.2843 against the loonie, dropping to near a 2-week low of 1.2678. On the downside, 1.25 is possibly seen as the next support level for the greenback.

Meanwhile, the Japanese yen declined to a weekly low of 105.86 against the greenback, following a 2-day high of 104.03 hit at 2:00 am ET. The yen is likely to find support around the 108.00 region.

The latest flash survey from Markit Economics showed that Japan’s manufacturing activity deteriorated for the fourth consecutive month in June.

The Markit/ Nikkei Manufacturing Purchasing Managers’ Index, or PMI, rose marginally to 47.8 in June from 47.7 in the previous month.

The yen dropped to more than a 3-week low of 158.07 against the pound and near a 2-week low of 110.83 against the franc, off its previous high of 153.30 and a 2-day high of 108.44, respectively. Further weakness may take the yen to support levels of around 160.00 against the pound and 112.00 against the franc.

The yen, having advanced to 117.92 against the euro at 5:00 pm ET, reversed direction and fell to near a 2-week low of 120.89. The next possible support for the yen may be found around the 122.00 area.

The yen weakened to more than a 3-week low of 80.40 against the aussie, near 2-month low of 76.78 against the kiwi and a 10-day low of 83.48 against the loonie, reversing from its prior highs of 78.19 and 74.68, and a 2-day high of 81.20, respectively. On the downside, the yen may challenge support around 82.00 against the aussie, 78.00 against the kiwi and 84.00 against the loonie.

Looking ahead, US unemployment claims for the week ended June 18, flash US manufacturing PMI for June, US new home sales data for May and the leading indicators index for May, are slated for release in the New York session.

Copyright RTT News/dpa-AFX

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