The yen and the Swiss franc rose while the euro fell on Tuesday after explosions in Brussels spurred flows into safe-haven currencies and assets. European shares were subdued, dragged down by airline and travel stocks, souring overall sentiment towards high-yielding and riskier assets after explosions at Brussels airport and a metro station killed around 20 people.
"The news is having impact on sentiment," said Yujiro Goto, currency strategist at Nomura. "Safe-haven currencies are being supported on the headlines." The yen rose to a 12-day high against the euro, rising almost 1 percent at one point. The yen also rose to a day's high of 111.38 yen per dollar, having traded lower before the start of the European trading session.
The Swiss franc climbed to a more than two-week high of 1.08765 franc per euro. Both currencies are much sought-after during times of turmoil in financial markets and uncertainty in the global economy. "Following the attacks in Paris last November, concerns about similar future events in Europe may have a more prolonged impact on the tourism and travel sectors, as well as a deterioration in consumer sentiment," said Charalambos Pissouros, senior analyst at IronFX Global.
Against the dollar, the euro was lower at $1.1205, after having recoiled from Thursday's one-month high of $1.1342, with investors ignoring the German IFO survey and euro zone purchasing managers' surveys due to the explosions in Brussels. The euro's losses saw the dollar index extend its rebound from a five-month low as two Federal Reserve officials supported the view that an interest rate hike is likely in coming months. The dollar index was up 0.3 percent at 95.603, pulling away from a five-month trough of 94.578 set on Friday.
Atlanta Fed President Dennis Lockhart said there was sufficient economic momentum to justify a further rate hike "possibly as early as the meeting scheduled for end of April". San Francisco Federal Reserve Bank President John Williams told Market News International that April or June would be "potential times for a rate hike". The comments came a week after the Fed kept rates unchanged and cut in half the number of projected hikes to a mere two this year. While dollar bulls were heartened by the latest comments, the reaction in fed funds futures was muted as some investors held back before speeches by more dovish Fed officials including Chicago Fed President Charles Evans.