USD Drops as EUR and JPY Rise on Safe Haven Flows

The dollar dropped against the euro and the Japanese yen on Monday as investors worried that signs of slowing growth in China will prevent the Federal Reserve from raising interest rates at its next meeting.

The euro EURUSD, +2.3972%  bought $1.1492, but briefly rose above $1.15, marking the first time it’s been at that level since February, FactSet data showed. The shared currency late Friday in New York traded at $1.1360.

The dollar USDJPY, -3.30%  briefly dipped below ¥120 before returning to ¥120.15. Late Friday, it bought ¥121.96. The yen was up against its major rivals as a selloff in Asian markets prompted investors to seek the perceived safety of the Japanese currency. The euro EURJPY, -0.92% was buying ¥137.93, down from ¥139.00 Friday.

Investors generally regard the Japanese currency as a haven asset that retains its value during periods of geopolitical or financial instability.

Overnight, Chinese shares wiped out all of this year’s gains, fanning fears about the deepening effects of a slowdown in the world’s No. 2 economy. The Shanghai Composite Index SHCOMP, -8.49%  dropped 8.5%. In Tokyo, the benchmark Nikkei Stock Average NIK, -4.61% closed down 4.6%

via MarketWatch

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