The yen rose against the dollar and the euro as U.S. stock futures fell on concern the global economic slowdown is deepening, limiting investor demand for higher-yielding assets funded in Japan.
The Japanese currency also climbed against the British pound after U.K. unemployment rose at the fastest pace in 16 years in October. It advanced versus the Australian and New Zealand dollars, two favorites of so-called carry trades. The euro gained against the dollar.
``The market has absorbed an enormous amount of bad news, but the overall trend in the market is very much entrenched, and it means yen strength,'' said Peter Rosenstreich, chief market analyst at ACM Advanced Currency Markets in Geneva.
The euro rose from a two-week low against the dollar earlier as its 14-day stochastic oscillator was 20.03 yesterday. A level below 20 suggests a security has fallen too fast.
``The currency has been sold quite a lot, so its slide looked overshot,'' said Ryohei Muramatsu, manager of Group Treasury Asia at Commerzbank AG in Tokyo. ``Some buying back probably occurred.''
Losses in the U.S. dollar may be limited after prices fell for the commodities that Australia and New Zealand export and as Standard & Poor's cut South Africa's ratings outlook.
The ICE's Dollar Index, which tracks the greenback against six trading partners, was at 86.643, from 87.075 yesterday, when it reached 87.279, the highest level since Oct. 28.
``There's negative news from Oceania, so I see the dollar rebounding against these currencies,'' said Takeshi Iba, vice president of foreign exchange in Tokyo at BBH Investment Services Inc., a unit of Brown Brothers Harriman.