Yen set to end week with 4 percent gain, gold at 1 year high

The yen swung between gains and losses on Friday, but was down 0.2 per cent at Y112.19 per dollar in morning trade on Friday. The Japanese currency hit a 15-month high versus the dollar on Thursday, when markets in Tokyo were closed for a public holiday.

The yen was eyeing a gain of about 4 per cent for this week, which would be its biggest weekly advance since October 2008. The currency rose 3.5 per cent last week.

Uncertainty about the global growth outlook and the state of the banking sector have led investors to flee to safe have assets such as the yen, government bonds and gold, which on Thursday had its biggest one-day rise in seven years.

The Chair of the Federal Reserve, Janet Yellen, appeared before the US Senate on Thursday (after appearing at the US Congress on Wednesday. Her testimony stuck with the line of gradual adjustments in interest rate rises. This led markets to diminish expectations of a rate rise at the Fed’s next meeting in March, causing the US dollar to weaken. The index of the US currency versus a basket of global currencies was down 1.4 per cent this week, and traded at 95.641 on Friday morning.

The rush to safe havens helped support gold, which is sensitive to moves in rate expectations and the greenback. On Thursday, gold jumped 4.1 per cent, its biggest one-day gain since January 2009 as investors rushed to the haven asset, but had eased 0.7 per cent to $1,237.65 an ounce.

Investors looking for safety also bought US government bonds, pushing prices higher and thereby pushing yields lower. The yield on the benchmark 10-year note traded as low as 1.6437 per cent on Thursday, its lowest point since mid-2012, while the yield on the 10-year UK gilt hit a record low of 1.226 per cent.

Oil markets continued to be volatile. Brent crude, the international benchmark, jumped 4.4 per cent at $31.38 a barrel on Friday morning, following a 2.5 per cent decline in the previous session. WTI oil was up 5 per cent at $27.51 after a 4.5 per cent drop on Thursday.

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