Dollar slided against the safe haven yen on Tuesday as investor risk odium mounted on the back of a sharp drop in equities. The battered euro caught some relaxation as the dollar slip against the yen, helping the common currency pull back a bit from a nine-year through. Constantly weakness in oil prices and niggle over the Greek political situation have spooked investors, sending Wall Street to its largest one-day fall down in about three months. As the region's equities floundered Tokyo's Nikkei sank 3 per cent the resulting flight to safety herd investors into the yen.
As a result, the dollar glided to as low lying as 118.65 yen from Monday's max of 120.68, moving further away from a seven-year peak of 121.86 set last month. A sharp fall downward in US Treasury yields also undermined the dollar versus the yen, with 10-year yields diving 14 basis points in just two sessions. "The dollar/yen surge late last month that ignored some weak US data was overdone, it was led by point of view and not based on solid factors. But the key theme of monetary policy divergence remains firmly in place, and I don't see the dollar reducing much more against the yen," Murata said. The euro last traded at $1.1961, up 0.3 per cent, after dipping into the $1.1860 area on Monday, reaching depths not seen since early 2006.
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