FOREX-Dollar firm, yuan strengthens on brighter China data
Reuters · 09/15 05:04
FOREX-Dollar firm, yuan strengthens on brighter China data

By Brigid Riley

- The dollar held steady in Asia on Friday, easing slightly from overnight gains against peers, while the yuan strengthened in the wake of some market-beating economic data out of China.

The dollar jumped overnight after U.S. retail sales received a boost from higher gasoline prices, increasing 0.6% in August versus an estimated 0.2% rise, while market participants reacted to the European Central Bank's 25-basis point hike.

The U.S. dollar index =USD last stood somewhat lower at 105.25, but still Thursday's six-month peak of 105.43.

The euro EUR=EBS remained Thursday's multi-month low of $1.0632 against the greenback.

The yuan and Australian and New Zealand dollars received a boost after a batch of economic data from China in the Asian morning came in better-than-expected for some key indicators, providing a rare lift in sentiment.

The offshore yuan CNH=D3 rose over 0.3% against the dollar to around 7.262 after the release.

The yuan had weakened on Thursday after the People's Bank of China's (PBOC) announced that it would make its second 25-basis point cut to banks' reserve requirement ratio this year.

While the move was aimed at keeping liquidity ample and supporting a shaky economic recovery, it could exacerbate the decline in the already struggling yuan CNY=CFXS, CNH= as domestic rates fall further.

The PBOC has provided "piecemeal" stimulus, but the economy still suffers from a lack of consumer confidence, said Rodrigo Catril, senior FX strategist at the National Bank of Australia.

"We think it's a little bit too early to see, if you like, the green shoots coming from all the stimulus that's been introduced."

The Australian dollar AUD=D3, a proxy for China growth, strengthened 0.5% to $0.6473, while the New Zealand dollar last stood 0.3% higher at $0.5931.

Elsewhere, the euro EUR=EBS was up 0.1% at $1.0652, just off a six-month low of $1.0632 against the dollar after the ECB hiked rates another 25 basis points at its monetary policy meeting on Thursday.

"It appears that markets have characterized the ECB’s 25bp hike yesterday as a dovish hike ... that has sent EUR and European yields tumbling," analysts at Mizuho Bank said in a .

Sterling GBP=D3 rose over 0.1% to $1.2429, hovering above a three-month low.

The yen JPY=EBS stuck 147.39 per dollar in the Asian morning.

With the yen hanging close to a 10-month trough, market participants have been keeping a cautious watch for the possibility of intervention by Japanese authorities.

"We're keeping a close eye on USDJPY at the 150 level and given the market's reluctance to take it up to that point, we don't think we're alone in doing this," said Simon Harvey, head of FX analysis at Monex Europe.

(Reporting by Brigid Riley; additional reporting by Indradip Ghosh; Editing by Lincoln Feast, Shri Navaratnam and Kim Coghill)