Yen gains vs. major peers amid drop in commodities

The yen (CME:JYM14) rallied the most in more than a week against the dollar on demand for safety as stocks and commodities fell amid concern about instability in China’s financial system.

The Japanese currency gained versus all of its 16 major counterparts as copper plunged to the lowest level since 2010 in a third day of losses. China, Japan’s biggest trade partner, reported on March 8 the biggest trade deficit in two years. New Zealand’s dollar gained amid forecasts the central bank will raise interest rates at a meeting this week.

Once copper fell through a certain level, systematic commodity-trading advisers “were likely in selling,” said Brad Bechtel, managing director at Faros Trading LLC in Stamford, Connecticut. “There definitely seems to be the S&P and dollar- yen moving in tandem. Copper broke through a support level.” A support level is an area on a chart where orders may be clustered.

The yen appreciated 0.2% to 103.07 per dollar at 1:21 p.m. in New York. It climbed as much as 0.3%, the most on closing basis since March 3. The Japanese currency gained 0.3% to 142.89 per euro. The European currency fell as much as 0.3% to $1.3834 before trading at $1.3863, down 0.1%. It rose on March 7 to $1.3915, the highest since October 2011.

Copper Sinks

Copper (COMEX:HGJ14) futures for May delivery dropped 2.7% to $2.9505 a pound on the Comex in New York, after touching $2.942, the lowest for a most-active contract since July 20, 2010. Trading was 74% higher than the 100-day average for this time of day, according to data compiled by Bloomberg. China is the world’s biggest metals consumer.

The S&P 500 Index (CME:ESM14) of stocks fell 0.3%, and S&P’s GSCI Index of raw materials declined 0.3%.

Russia showed no signs of yielding in a standoff with Ukraine over the region of Crimea, which will vote March 16 on joining Russia.

“Markets are in a risk-off mood, especially in emerging- market foreign-exchange space,” said Alvin Tan, a currency strategist at Societe Generale SA in London. “My sense is that there is some nervousness about Crimea, as we approach the Sunday referendum and Russia still unwilling to compromise.”

Deutsche Bank AG’s Currency Volatility Index, based on three-month implied volatility on nine major currency pairs, fell 23 basis points to 7.04%, the lowest level since December 2012. JPMorgan Chase & Co.’s G7 Volatility Index dropped to 7.26%, also the least since December 2012.

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