NEW YORK: The US dollar fell against the safe-haven yen for a third straight session on Wednesday as risk appetite diminished amid worries about Greece and the outlook for China, the world's second largest economy.
The greenback has lost about two percent versus the yen in the last three days, moving further away from a seven-year peak above 121 yen hit on Monday this week. Its two percent fall was the worst three-day loss for the dollar in eight months.
Still investors viewed the dollar's pullback as temporary. The outlook for the dollar remained bright being the only developed economy on the verge of its first interest rate increase since the start of the global financial crisis in 2008.
"This recent fall in the dollar against the yen is more about profit-taking from seven-year highs and a quiet week is a good opportunity to take those profits," said John Doyle, director of markets at Tempus Consulting in Washington.
"It didn't help that we have a bit of risk aversion in the market with the recent weakness in the Chinese data."
There were also concerns about Greece. The Greek government has brought forward to next week a presidential vote that will force nearly two dozen independent lawmakers to decide whether to side with Prime Minister Antonis Samaras' pro-bailout cabinet or with leftist radicals who have vowed to tear up the bailout.
That decision prompted the steepest daily fall in Greek stocks on Tuesday in more than a quarter century, as well as a jump in bond yields.
In mid-morning New York trading, the U.S. dollar fell 0.8 percent to 118.70. At one point on Tuesday, it dropped more than two percent to 117.90 in a sharp turnaround from a seven-year peak of 121.86 set on Monday.
The euro was up 0.3 percent at $1.2415, still below a high of $1.2447 struck on Tuesday when investors trimmed long dollar positions, booking profits ahead of the year-end.
The U.S. dollar index was down 0.3 percent at 88.440, not that far though from a five-year high just below 89 touched last Monday.
The Norwegian crown, meanwhile, slumped to its lowest in over five years against the euro on Wednesday, battered by falling oil prices and investors betting Norway's central bank will point towards further monetary easing on Thursday.
The euro rose 1.1 percent to 8.9090 crowns, its highest since mid-2009.
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