Brexit confusion rattles FX markets, boosts yen

• Yen, franc gain on renewed Brexit jitters
• Currencies quiet before ECB, Scandinavian central bank meetings
• Sterling below $1.29 after latest parliamentary defeat

LONDON: The Japanese yen rose to a one-week high and the Swiss franc gained on Wednesday as investors sought safer assets after British lawmakers forced a delay in the UK government's Brexit plans.

Foreign exchange trading was generally quiet with Brexit uncertainty hanging over the market and central bank meetings due on Thursday in Sweden, Norway and the euro zone.

On Tuesday, British lawmakers opposed Johnson's timetable for pushing the Brexit legislation through parliament in three days.

Johnson now looks set to push for a general election before Christmas to break the impasse. It is up to the EU to decide whether to extend Britain's Oct. 31 deadline for its departure.

Adam Cole, a strategist at RBC Capital Markets, said Brexit was driving a general risk-off tone.

"Things could change very quickly today, depending on the EU response," Cole said, adding he did not see much downside risk now that a no-deal Brexit was off the table.

Morten Lund, a senior strategist at Nordea, said markets were reacting to the likelihood of a UK election.

The Japanese yen rose to 108.25 per dollar, its strongest since Oct. 15, before settling at 108.465, up marginally on the day. Versus the Australian dollar, the yen strengthened as much as 0.5%.

The Swiss franc, which investors also tend to buy when they feel nervous, rose 0.1% to 1.1003 francs per euro.

The euro edged 0.1% to $1.1115 before Thursday's meeting of European Central Bank policymakers, outgoing president Mario Draghi's final policy meeting.

The dollar index was up slightly at 97.592, down 2% since the start of the month.

Sterling slipped as low as $1.2842 in Asia, recovering later to around $1.2868. That left the pound more than 1 cent off Monday's five-and-a-half-month high.

Australia's dollar dropped 0.2% to $0.6840 as risk aversion knocked a currency considered a barometer for investors' mood.

Scandinavian currencies were being watched ahead of central bank meetings in Norway and Sweden.

The Swedish crown was little changed against the euro at 10.743 crowns per euro, while the Norwegian crown continued losses that saw it reach a record low against the euro last week.

Versus the Swedish crown, the Norwegian crown continued to fall, touching its lowest since January at 1.0508. The euro added as much 0.4% against the Norwegian currency to 10.2240 crowns.