The dollar sank to its weakest level since mid-April against the yen on Tuesday, after escalating tensions in the Middle East and the coming testimony of the former FBI director, British elections and a European Central Bank meeting shook the currency market.
The dollar fell 0.9 percent to 109.28 yen, while euro dipped as low as 122.93 yen.
The dollar index, which measures the US currency’s strength against the basket of other currencies, fell to its lowest level since the November U.S. election.
Gold and yen attractive in a risky week
The Japanese yen, widely considered by many as a safe haven currency, has strengthened to the level of six-week high against the dollar as most regional stock exchanges suffered losses.
“It’s geopolitical risks leading the direction. The dollar fell to its lowest level in six weeks against the yen. This shouldn’t be surprising given the scale of event risks this Thursday,” said Hussein Sayed, chief market analyst at FXTM.
Gold is approaching its highest level for the year, and it is currently standing at $1291.20, higher than it has been since November. The metal is up 2.5 percent over the last year and 4.2 percent over the last three months.
Oil extends decline
On Tuesday, Brent crude was trading just over $49, extending Monday’s one percent slide. U.S. crude was 0.5 percent lower at $47.18 a barrel on Tuesday, after falling 0.55 percent on Monday.
The week has started nervously for oil, after Saudi Arabia, the UAE, Egypt and Bahrain closed transport links with Qatar, on accusation that it backs terrorism. Qatar described these accusations as baseless and unjustified. Even tough oil prices initially surged, they ended the day lower.
Some investors fear that cutting diplomatic ties with Qatar could provoke the country to give up its commitment to hold back production to bolster prices. Nevertheless, several analysts claim that these fears were unjustified.
Qatar produces about 620,000 barrels of crude per day (bpd), making it one of the smallest producers in OPEC.