The safe-haven yen and Swiss franc fell on Thursday after Chinese stocks rebounded and worries about Greece eased somewhat as Europe awaited reform proposals from the debt-burdened country to back its request for another three-year loan. The 6 percent gain in Shanghai shares was enough to prompt some optimism from investors after a rough month dominated by the euro zone's troubles with Greece and a drop of more than 30 percent in China's main stock market indexes.
Those elements were behind the biggest one-day push this year into the perceived safety of the yen on Wednesday, although on Thursday, the Japanese currency gave up some of those gains. The yen and Swiss franc typically rally when there is financial or geopolitical stress as investors seek out safer and more liquid investments. "The FX market is generally taking its cue from overall risk sentiment and so equities are higher today," said Mark McCormick, currency strategist at Credit Agricole in New York.
"Risk-sensitive currencies such as the Aussie dollar are higher as well. But that kind of masks the underlying fundamentals, which continue to favor a better backdrop for the US dollar." In midmorning New York trading, the dollar was up 0.5 percent against the yen at 121.31. The greenback also rose against the Swiss franc, up 0.2 percent at 0.9470 franc. The euro, meanwhile, was down 0.1 percent against the dollar at $1.1062 having topped $1.11 in Asian trade.
With the exception of a dip at the start of this week, the euro has held up well in the face of Greece's troubles. A fall in US yields following the release of minutes of the Federal Reserve's June meeting offered little hope to dollar bulls. The dollar index was flat at 96.279.
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