Euro and yen draw investors as dollar becomes uncertain

IBT

LONDON: The euro and the Japanese yen gained in thin trading on Monday as concerns about a partial government shutdown in the United States weighed on investor sentiment and the dollar, although Chinese plans to cut trade tariffs helped lift the mood.

Trading volumes were thin with most global markets preparing to shut for Christmas, while Japan was closed for a holiday.

After a bruising few weeks in which worries about spluttering global growth have knocked markets lower, investors were reluctant to take on many new risks at the end of the year.

A less dovish than expected Federal Reserve meeting last week has heightened fears the U.S. central bank will be raising interest rates into a weakening U.S. economy.

A partial U.S. government shutdown, which President Donald Trump’s chief of staff said could continue to Jan. 3, when the new Congress convenes and Democrats take over the House of Representatives, has added to investor nerves.

The Japanese yen, perceived as a safe place to put money in times of uncertainty, rose as much as 0.3 percent against the dollar to 110.81 JPY= before settling at 111.09. The yen’s gains in the last six days total more than 2 percent.

The Swiss franc, another currency viewed as a safe-haven, rose versus the dollar CHF= but was unchanged against a broadly stronger euro EURCHF=.

The mood did benefit, however, from China unveiling plans to remove import and export tariffs in 2019 on a range of goods, soothing fears about an ongoing trade dispute with the United States.