NEW YORK: The yen and Swiss franc on Wednesday surrendered gains and turned lower as a rise in oil prices and a recovery in European stock markets and U.S. equity futures dimmed the appeal of these safe-haven currencies.
Earlier, the yen had strengthened as Asian stock markets fell and oil prices slipped. In addition, China fixed a softer mid-point for the onshore yuan, a factor that weighed on riskier emerging market currencies and growth-linked currencies like the Australian dollar.
Against the yen, the dollar was up 0.1 percent at 114.23 yen , recovering from a low of 113.37 yen struck early in the London session.
"If broader risk aversion is steadying, as we suspect, we have to think the yen is at risk of giving back more of its recent strength," said Shaun Osborne, chief currency strategist, at Scotia Capital in Toronto. "Japanese policy makers will have no complaint."
The greenback also edged higher against the yen after a surprise rise of 0.1 percent in U.S. producer prices for January. Economists polled by Reuters had forecast the PPI dropping 0.2 percent last month and falling 0.6 percent from a year ago.
U.S. housing starts, meanwhile, unexpectedly fell in January likely as bad weather disrupted building activity in some parts of the country. The markets, however, largely shrugged off this report.
The dollar tumbled below 111 yen last week, a 16-month low, after stocks and commodities plunged and expectations faded for another interest rate increase by the Federal Reserve. It rebounded as risk aversion subsided but remained vulnerable to swings in oil prices.
The dollar also rose against the Swiss franc, up 0.4 percent on the day at 0.9924.
Oil prices rose as efforts to freeze production levels and ease a global glut turned to Iran, after a lacklustre response to Tuesday's deal between Saudi Arabia and Russia. That rise in oil helped European stock markets, although risk sentiment was at best fragile amid concern global growth was slowing.
Meanwhile, the low-yielding euro was down 0.1 percent at $1.1040 while sterling edged up from a two-week low against the dollar after mixed data from the UK labor market showed wage growth slowing but the number of people in employment reaching a record high.
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