Risk aversion helps yen, Swiss franc

Fears about more losses due to the current credit crisis helped the yen and Swiss franc to gains Thursday on the theory that investors will be less inclined to seek out risky currency trades funded with the low-yielding currencies.

In late morning trade in New York the yen traded at ¥161.1536 to the euro, at ¥108.3350 to the US dollar and at ¥95.1723 to the Australian dollar, while the Swiss franc was at SFr1.0860 to the greenback and at SFr1.6154 to the shared currency.

Meanwhile, the US dollar declined versus the euro on concerns that there will be more write downs among financial firms, on fears that new gains in oil prices will further hurt the US economy, and on new data from the Philadelphia Fed that manufacturing in that region contracted again in July.

At shortly before noon in New York, the dollar traded at $1.4875 to the euro.

The pound was also weaker against the euro on a government report showing that UK retail sales were up only 0.8 percent in July and after Deutsche Bank (FWB: DBK; NYSE: DB) predicted that the Bank of England will cut interest rates by 1 percentage point next year.

At late morning in New York the pound traded at 79.25p to the euro while it took $1.8755 to buy a pound.

The Australian and New Zealand dollars and the Canadian dollar all gained on the greenback as commodities prices rose, with the Aussie worth 87.85 cents US, the kiwi at 71.76 cents US, while the loonie traded at C$1.0461 to the dollar.

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