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By Bloomberg

The yen rose to its strongest level in four weeks against the dollar as investors sought haven assets on concern steep declines in commodity prices signaled the global economy is slowing.

Japan’s currency advanced at least 0.5 percent against all of its 16 major counterparts as stocks slumped in Tokyo. Australia’s dollar fell to a one-week low on speculation that oil and copper prices at the lowest levels since 2009 will curb demand for the country’s commodities. The Canadian dollar weakened past C$1.20 against the greenback for the first time since April 2009 and Russia’s ruble dropped for a fourth day.

“Risk aversion continues to sway currencies amid declines in stocks, oil and metals,” said Satoru Igarashi, senior currency strategist, at Mizuho Securities Co. “Dollar-yen continues to test new lows.”

The yen rose 0.8 percent to 116.98 per dollar at 9:56 a.m. London time, after being at 116.54, the strongest since Dec. 17. It climbed 1 percent to 137.38 yen per euro, extending its advance to a fifth day, the longest streak since June. The euro fell 0.3 percent to $1.1744 after it touched $1.1727, the least since December 2005.

The Aussie slid 0.4 percent to 81.35 U.S. cents, while Canada’s loonie declined 0.1 percent to C$1.1975 versus its U.S. peer after reaching C$1.2017.

Stocks Slump

Japan’s Topix index of stocks slumped 1.2 percent and the German Stock Index was little changed.

Brent crude oil for February settlement slid for a fifth day after reaching $45.19 a barrel in London yesterday, a price unseen since March 2009. Copper for delivery in three months on the London Metal Exchange dropped as much as $506.75 a metric ton to $5,353.25, the lowest intraday price since July 2009.

“If stocks continue to slump on the idea that low oil prices will become a risk to the U.S. or the global economy, dollar-yen will continue to fall,” said Masato Yanagiya, head of foreign exchange and money trading at Sumitomo Mitsui Banking Corp. in New York. “It’ll be easy for the yen to strengthen amid a flight to quality.”

The yen is the best performer in the past month against nine developed-nation peers tracked by Bloomberg Correlation- Weighted Indexes. It has risen 5.6 percent on increased demand for haven assets amid the oil-led plunge in commodity prices and declines in global stock markets. The euro has fallen 2.7 percent, while the dollar gained 3.9 percent.

ECB Outlook

Russia’s ruble slid 1.1 percent to 65.94 against the dollar, pushing its drop this year to 7.9 percent, the worst performer among 31 major currencies tracked by Bloomberg. It slumped 24 percent in the year through Dec. 31. Norway’s krone climbed for the first time in four days, adding 0.4 percent to 7.7247.

The euro has fallen in eight of the past nine days against the dollar amid speculation the European Central Bank will announce a plan buy government bonds to stave off deflation. Richard Clarida, executive vice president at Pacific Investment Management Co., said he sees the 19-nation shared currency falling to parity with the greenback, adding that the ECB may act as soon as its policy meeting on Jan. 22.

“They’ll probably announce a big program, perhaps 500 billion euros, to buy sovereign bonds in the secondary market,” he said in an interview on Bloomberg Television’s “Surveillance” with Tom Keene. For the euro, “the next technical is parity. There’s a lot more downside.” He didn’t specify a time frame.

ECB Governing Council member Ewald Nowotny said during a panel discussion in Vienna this week that officials must treat the deflation threat seriously and shouldn’t delay a response.

“There are expectations for sovereign quantitative easing by the ECB,” said Sumitomo Mitsui’s Yanagiya, referring to a bond-buying program. “Once the details of the stimulus become clear, the euro should drop into a $1.10-$1.15 range.”