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USD/JPY extends losses, oil back below $30
The US dollar was weaker for a third day, down 0.2 per cent early on Wednesday at a fresh four-month low of 95.873, while the euro gained 0.1 per cent to $1.1299. Risk appetite was off as the market was focused on renewed volatility in the oil price and ongoing concerns about the health of the global banking sector.
Investors rushed to the safety of gold which was up 0.3 per cent at $1,192.15 an ounce.
Another safe haven asset is the Japanese yen, which was 0.3 per cent stronger at Y114.74 per dollar and eyeing a third-straight day of gains.
The Japanese government 10-year bond yield was down 0.8 basis points at -0.03 per cent, but had briefly risen back into positive territory to 0.05 per cent. On Tuesday, the yield on 10-year paper fell below zero for the first time on record, becoming the first 10-year bond of a G7 nation to do so.
Hurting sentiment was another bout of volatility in the oil market as the as the IEA (International Energy Agency) said global oil production fell in January by less than some had expected. That saw Brent crude, the international benchmark slump 7.8 per cent on Tuesday and West Texas Intermediate, the US marker, fall 5.9 per cent.
In morning trade, prices were recovering, with Brent up 2.3 per cent at $31 a barrel and WTI up 1.9 per cent at $28.48.
All eyes now turn to Federal Reserve Chair Janet Yellen’s testimony later today before US Congress in the hope that she could offer some comfort to jittery markets.
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