By Kosaku Narioka
The yen surged Friday in Asia, hitting new multi-month highs against the euro and the Australian dollar, after news of a U.S. strike against Syria increased geopolitical uncertainty in the Middle East, fueling caution among investors.
The U.S. launched missiles against a Syrian air base in the wake of a suspected chemical-weapons attack in the country earlier this week. The news jolted markets whose participants had expected the main news of the day to come from a meeting between President Donald Trump and Chinese President Xi Jinping.
Katsunori Kitakura, strategist at Sumitomo Mitsui Trust Bank, said the tough diplomatic stance shown by the U.S. had strengthened caution among investors. The U.S. strike on Syria added another layer of uncertainty to the outcome of the summit meeting between Washington and Beijing, with tensions already bubbling over North Korea and China's trade practices. "There may be some turbulent developments," he said.
The euro was at 117.66 yen as of 0450 GMT, compared with Y117.86 late Thursday in New York, according to EBS. The common currency earlier fell to as low as Y117.32, the lowest level since Nov. 18.
The Australian dollar was at Y83.27 after hitting a four-and-a-half month low of Y82.79 earlier. The Australian dollar was at Y83.60 in late New York trading.
Michiyoshi Kato, senior vice president of forex sales at Mizuho Bank, said the initial response to the U.S. strike on Syria was safe-haven yen-buying, but a tough U.S. stance means America could also use force against North Korea. If the escalation of geopolitical tensions in East Asia came closer to Japan, that could trigger yen-selling, he added.
The dollar was at Y110.57 after hitting as low as Y110.14. The greenback was at Y110.80 late New York.
The euro has trended lower recently due to concerns about the upcoming French elections and potential issues with the regional integrity. Volatility implied by one-month at-the-money euro-yen options, which now encompass the runoff-election date of May 7, rose to 15.90% from around 11% at the beginning of the week.
Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT
Latest Previous %Chg Daily Daily %Chg
Dollar Rates Close High Low 12/31
USD/JPY Japan 110.57-58 110.81-82 -0.21 111.00 110.14 -5.50
EUR/USD Euro 1.0644-47 1.0643-46 +0.01 1.0662 1.0639 +1.20
GBP/USD U.K. 1.2468-70 1.2468-70 0.00 1.2477 1.2453 +1.00
USD/CHF Switzerland 1.0047-51 1.0048-52 -0.01 1.0061 1.0030 -1.37
USD/CAD Canada 1.3406-11 1.3411-16 -0.04 1.3433 1.3397 -0.25
AUD/USD Australia 0.7528-32 0.7543-47 -0.20 0.7548 0.7517 +4.55
NZD/USD New Zealand 0.6970-76 0.6968-74 +0.03 0.6975 0.6960 +0.69
EUR/JPY Japan 117.68-72 117.93-97 -0.21 118.17 117.32 -4.39
Source: ICAP PLC
Write to Kosaku Narioka at email@example.com