The possibility that the Portuguese banking system may be on the verge of a crisis which could have wide spread implications for the Eurozone banking system has sent FX investors flocking to the safe haven Japanese Yen which, as a result, is poised to close out the week higher. The problems in the family-owned bank, the largest in Portugal, are escalating investors fears that this may be more than just an isolated incident and could have systemic repercussions.
As reported at 10:48 a.m. (JST) in Tokyo, the USD/JPY was trading at 101.35, while the EUR/JPY was at 137.71; demand for the safe haven currency sent the Yen to a 7pweek peak against the U.S. Dollar and a fresh 5-month high versus the common currency Euro.
Rates Unchanged by Bank of England
In the U.K., the decision by the Bank of England was to maintain the status quo on monetary policy, but what has raised uncertainty is the bank’s failure to provide any future guidance. Investors have been questioning the Bank of England’s recent change in bias on the timing of an interest rate hike and were hoping that guidance would provide some clarity. The GBP./USD eased back to $1.3132 but remains close to this month’s 6-year peak.