Investing.com - The safe haven yen rallied to almost 18-month highs against the dollar on Monday as oil prices slumped after major producers failed to reach an agreement to cap production.
USD/JPY touched lows of 107.85, not far from the trough of 107.62 set on April 11 and was last at 108.05, off 0.67% for the day.
A meeting of the world’s major oil producers in Doha, Qatar on Sunday ended without an agreement on curbing production intended to prop up prices.
The talks collapsed after Saudi Arabia demanded that Iran also join the agreement to cap output.
Iran had already declined to take parts in the talks and said it would not participate in an output freeze until its output levels return to where they were before international sanctions were imposed over its nuclear program.
Steep falls in oil prices have hit investor confidence and look likely to continue to weigh on risk appetite.
The yen has strengthened broadly since the start of the year as investor uneasiness about negative-interest-rate policies in Japan and Europe also bolstered investor appetite for safe haven assets.
The strong yen is posing a challenge to the Bank of Japan’s attempts to shore up inflation and Japanese officials have indicated that they could intervene to weaken the currency.
But the likelihood of Japanese intervention diminished after the U.S. indicated that it would not support efforts to weaken the currency at a weekend meeting of G20 leaders.
The dollar had already fallen against the yen on Friday as lackluster U.S. economic reports underlined the view that the Federal Reserve is likely to stick to a cautious approach on future interest rates increases.
Lower interest rates make the dollar less attractive to yield seeking investors.
The dollar was slightly lower against the euro, with EUR/USD easing up 0.14% to 1.1300.
The commodity linked currencies were sharply lower, with AUD/USD down 0.69% to 0.7671 and USD/CAD jumping 1% to one-week highs of 1.2943. NZD/USD was last at 0.6911.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, dipped 0.07% to 94.61.