Euro and sterling gain as havens weaken

Japan's yen fell to a month low against the US dollar while the euro gained against both the dollar and the yen as haven currencies were hit by a fresh wave of risk appetite.

The yen fell to the Y112 against the dollar and hit its weakest level of Y122.63 against the euro since mid March.

Political fears ease

Although the yen remains about 4.3% stronger against the dollar over the year due to concerns about Brexit, adjusting to a new US administration and the ongoing French presidential elections, these fears have faded in recent weeks thanks to some encouraging signs from the global economy.

Over the May-Day weekend, there were outbreaks of violence on the streets of Paris. However, the French election - with business-friendly centrist candidate Emmanuel Macron enjoying an 18 point poll lead over the National Front's Marine Le Pen - appeared to have little impact on the euro's progress.

ECB plans in focus

Traders are now more focused on plans by the European Central Bank to start tightening its grip on monetary policy.

Through its quantitative easing programme of bond buying, the ECB's balance sheet has expanded to over €4tn in support of eurozone growth since the financial and credit crises.

"We expect markets to start focusing on plans to taper QE starting this summer," said Bank of America Merrill Lynch analysts in a report.

Pound also gains

Joel Kruger at LMAX Exchange, the UK-based forex trading exchange, says major currencies like the euro and the pound are gaining ground thanks to a reduction of structural risk in the eurozone and UK.

"Increased odds for stability on the political front, have made these major currencies attractive again, with many macro players starting to build back into what they believe to be material undervaluation in the euro and pound," said Kruger.

The euro was up 0.1 per cent to €1.0912 versus the dollar, and is up more than 2% over the past month. Against the yen it was up 0.4 per cent on Monday, and is up 3.3% over the month.

The pound remained flat against the dollar at $1.2890 and was down 0.1% to €1.1810 against the euro. Over the last month, however, the pound was up 3.1% against the dollar and 0.9% against the euro.As soon as a trader makes a transaction the risk starts.