Forexpros – The U.S. dollar rose to a three-week high against the yen on Monday, as reports of the death of North-Korean leader Kim Jong il supported demand for the safe haven greenback.
USD/JPY hit 78.16 during early European trade, the pair’s highest since November 29; the pair subsequently consolidated at 77.97, rising 0.12%.
The pair was likely to find support at 77.45, the low of November 28 and resistance at 78.27, the high of November 29.
The dollar strengthened broadly on the news of Kim Jong il’s death as concerns over geopolitical instability in northeast Asia escalated amid uncertainty over the future leadership of the state.
In Japan, Finance Minister Jun Azumi said he would monitor financial market moves following the North-Korean news.
Earlier in the day, Japan’s government said it planned to trim its initial budget for the next financial year to JPY90 trillion from this year’s record of JPY92 trillion.
Meanwhile, markets remained jittery after Fitch ratings agency warned on Friday it may downgrade France and six other euro zone countries as it believes that a comprehensive solution to the region’s debt crisis is “technically and politically beyond reach.”
Moody’s cut Belgium by two notches to Aa3 from Aa1, citing risks to economic growth and the costs of bailouts of banks such as Dexia.
Elsewhere, the yen was fractionally lower against the euro with EUR/JPY edging down 0.01%, to trade at 101.43.
Later in the day, euro zone finance ministers were to hold a conference call about the draft text of a new fiscal plan agreed earlier this month. Talks were also to include the size of individual loans to the International Monetary Fund.
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