SYDNEY: The dollar struggled against the yen in Asia on Thursday, having plumbed a fresh three-month low for a third straight day, raising the danger that Japan would act to weaken its currency.
The greenback also lost ground against the euro and commodity currencies as risk sentiment improved after a batch of manufacturing data from China to Germany allayed the market's worst fears about global growth.
The dollar stood at 76.17 yen, having slid as far as 76.00. That was not far off a record low of 75.31 plumbed on Oct. 31, when Japan intervened heavily to curb the yen's strength.
The euro rose to $1.3166 from a one-week low of $1.3023. Further supporting the single currency was news that Greece's long-delayed deal with private sector creditors to cut its debt burden is nearly wrapped up.
All of that pushed the dollar index to an eight-week low of 78.623. It was last at 78.859, with support seen at 78.249 -- the 50 percent retracement of its October to January rally.
"PMIs in the US, China, Germany are more resilient than expected, encouraging heavy money to finally step in as the holy combination of PMIs above 50 and loose monetary policy means buying risk," said Sebastien Galy, strategist at Societe Generale.
"Hence, the sugar rush is steadily moving down the veins of the financial system, helping to pressure the USD lower and EM higher."
Commodity currencies like the Australian dollar were among the best performers overnight. The Aussie rallied to a three-month high of $1.0742, before steadying at $1.0708.
Strong resistance is seen in the $1.0750/70 area, the peaks set in October and September. A break above that could open up the way for a retest of the 29-year summit of $1.1081 scaled in July.
The immediate focus for the Aussie, however, is Australia's trade data for December due at 0030 GMT.
"In light of the China PMI, the Australian December trade balance will be noted with keen interest this morning especially exports to China," analysts at BNP Paribas wrote in a note.
"Exports to China from Australia reached a record high in October, but declined in November. A rebound in the number will keep AUD supported, but it is worth noting that the number tends to be volatile and so the trend matters more."
Markets are also waiting to see how debt sales from France and Spain will fare. Recent successful debt auctions showed the European Central Bank's injection of nearly half a trillion euros of cheap funds has helped bolster demand.
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