London: The dollar rebounded against the yen and the Swiss franc yesterday after a rise in US bond yields, although the bounce lacked conviction as worries about a US recovery remained strong.
Chinese trade data showed higher-than-expected imports for August, pushing currencies such as the Australian dollar higher against the low-yielding yen, which is often used to fund investments into higher-yielding currencies.
The dollar was off this week's 15-year low against the yen, helped by a rise in US Treasury yields on Thursday on US jobs data and a widening in the US-Japan yield spread.
"Rising US yields have been driving the dollar against the yen," said Gareth Berry, currency strategist at UBS.
Double dip?
US initial claims for jobless benefits fell to their lowest in two months. Payrolls data last week showed fewer job losses than expected in the world's largest economy.
Berry said it was too early to judge whether the US economy was headed for a double-dip.
"We need a succession of good data out of the US for the markets to have a stronger conviction about the dollar," he said.
Traders said comments from Bank of Japan Governor Masaaki Shirakawa that Japan needs to raise the foreign exchange issues at international meetings also pushed the yen lower.
The dollar rose 0.4 per cent to 84.12 yen (Dh3.67). It briefly touched a high of 84.28 yen. The next target will be its high of 85.23 yen hit after the US payrolls data last Friday.
The dollar hit a 15-year low of 83.34 yen this week, intensifying speculation that Japanese authorities might step in to curb yen gains if the move accelerates towards 80 yen. Japanese Prime Minister Naoto Kan reiterated yesterday that authorities would take decisive steps if needed.
Attention is also turning to a ruling party leadership race on September 14 in which Kan faces a challenge from power broker Ichiro Ozawa.
A Reuters poll showed a win by Ozawa would likely give a short-term boost to stocks but weaken Japanese government bonds and the yen.
