$A lower as greenback advances in safe-haven rally

"While the USD and JPY have retained their safe haven status, the lack of clarity on the future relationship between the UK and Europe suggests that the GBP adjustment still has more to go," wrote NAB currency strategist Rodrigo Catril in a morning note. 

"The NZD and AUD have also underperformed (down 1.74 per cent and 1.66 per cent respectively) and notably the NZD is now struggling to stay above the 70¢ mark," said Catril of the overnight currency market moves. "The Euro loss 1 per cent against the USD and JPY/USD is unchanged. Speculation of potential currency intervention by the BoJ has probably played a factor on the subdued performance of the Yen relative to the USD."

A gauge of the greenback climbed by 2.7 per cent during the past two days as traders bought safe assets amid questions about the future of the UK economy and its broader impact on Europe. The yen rallied against all of its 31 major peers for the past two days by between 4 to 15 per cent.

"The dollar is up because of safe-haven demand, and the yen as well," said Georgette Boele, a currency strategist at ABN Amro Bank in Amsterdam. After the Brexit vote, "there are so many questions about how things will develop - there's still a lot of uncertainty, and of course, this is also an unprecedented event".

The US currency pared its first-half decline after the UK vote, which sent the pound tumbling to the lowest in three decades. The effects of the paralysis spreading through UK politics, and what it means for Europe, prompted investors to sell the pound and euro and seek safety in the dollar and yen.

The US dollar "will be supported by its role as a safe-haven currency amidst the uncertainty of the UK vote," currency strategists including Joseph Capurso at Commonwealth Bank of Australia said in a note. "We anticipate currency volatility will remain elevated over the early part of this week as participants digest the implications."