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FOREX-Yen rises on heightened risk aversion, Aussie hits 3-week low
April 4, 2017 / 8:21 AM / 8 months ago

FOREX-Yen rises on heightened risk aversion, Aussie hits 3-week low

* Dollar/yen hits 1-week low

* Euro-yen hits 4-month low

* RBA views don’t point to rate hikes soon - Aussie, Kiwi slip

* Graphic: World FX rates in 2017

By Ritvik Carvalho

LONDON, April 4 (Reuters) - The yen gained on Tuesday as a risk-averse investors flocked to the safe-haven currency, while Australia’s dollar sank to a three-week low after its central bank raised concerns about domestic labour conditions.

Investor appetite for risk has been dulled this week by factors including nerves ahead of an upcoming meeting between U.S. President Donald Trump and Chinese President Xi Jinping and a suspected suicide bombing in St. Petersburg, Russia.

The dollar extended Monday’s losses and was down 0.4 percent at 110.46 yen after hitting 110.335, its lowest in a week in Asian trading. The euro fell 0.6 percent to a four-month low of 117.585 yen, and the Australian dollar fell 0.7 percent against the yen.

“(The yen buying) is based on broad-based risk-off since yesterday. There was a tragedy in Russia and there may be some hedging-type buying ahead of the French presidential debate and also French elections in three weeks,” said Yujiro Gato, currency analyst with Nomura in London.

“Clearly risk sentiment is not good at the moment.”

Monday’s largely positive U.S. construction spending and manufacturing data affirmed a steady improvement in the economy, but did little to uphold Treasury yields and the dollar.

The euro was 0.2 percent lower at $1.0652, with an earlier overnight advance tempered by a sharp decline in German bond yields driven by flight-to-safety following the bombing in St. Petersburg.

The Reserve Bank of Australia’s decision to keep its cash rate at a record low of 1.5 percent on Tuesday came as little surprise. But the Aussie fell after the central bank hinted it was not too confident about domestic labour and inflation conditions.

The Australian dollar lost nearly 0.6 percent to reach a three-week low of $0.7562, having declined steadily over the past two weeks from a four-month high of $0.7750.

The New Zealand dollar sank to a three-week low, moving in tandem with the Aussie and down 0.5 percent on the day.

“The FX market got the message that the RBA does not want to abandon its neutral approach any time soon and is trading Australian dollar slightly weaker following the interest rate decision,” Commerzbank analysts wrote in a note to clients.

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=

Reporting by Ritvik Carvalho; Additional reporting by Tokyo Markets Team; Editing by Tom Heneghan

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