Yen jumps versus majors in London

The yen jumped to a 4-1/2-month high against a host of major currencies on Wednesday as tumbling equities and persistent worries about credit markets prompted investors to slash exposure to riskier carry trade positions.
The dollar, sterling, euro and Australian and New Zealand dollars all fell to their weakest points since late March/early April against the yen as investors continued to cut long positions in currencies with attractive yields as financial market turmoil continued to bubble.
Canada's main rating agency DBRS warned on Tuesday of possible defaults in the C$116 billion ($109 billion) market for asset-backed commercial paper, as one issuer said it couldn't repay paper that is due and a mortgage lender said its profits could be hurt.
The yen's rally resulted in a surge in implied volatility on yen currency options, a sign the position unwind has caught investors wrong-footed and is forcing them to pay more for protection against further sharp price moves.
The dollar, meanwhile, continued to benefit from the broad financial market distress, with the 'flight to liquidity' lifting the greenback's value against a basket of major currencies to its highest in six weeks.
"The de-leveraging story is starting to spread to more markets," said Laura Ambroseno, currency strategist at Morgan Stanley in London.
"We're at important levels; we've had big moves over the last few weeks," she said, referring to psychological levels such as sterling breaking below $2.00, the euro dipping below $1.35 and 115.00 dollar/yen gradually slowly but surely into view.
At 1205 GMT the dollar was down 0.7 percent on the day against the yen at 116.70 yen, near its session low of 116.62 yen, according to Reuters data, while the euro was down 1.2 percent at 157.22 yen.
The New Zealand dollar was down 2.2 percent at 83.48 yen and the Aussie tumbled 2.1 percent to 96.00 yen. The euro was down 0.5 percent on the day at $1.3470, around its lowest since late June.
The euro slipped to a six-week low against the dollar, as investors fretted about European exposure to the problematic US subprime mortgage sector - raising speculation that the European Central Bank may not lift interest rates next month.