LONDON: The dollar pushed higher against the euro and the yen on Wednesday as market volatility eased after China eased monetary policy, allaying fears over an economic slowdown which fueled a broad based selloff in global financial markets.
The dollar recovered ground against the yen, with USD/JPY up 0.5% to 119.5, not far from overnight highs of 119.83.
The dollar hit an eight-month trough of 116.18 against the yen earlier in the week before rebounding after China’s central bank cut interest rates on Tuesday for the second time in two months.
The euro was also lower against the greenback, with EUR/USD slipping 0.18% to 1.1499, after falling as low as 1.1465 overnight.
The single currency has been boosted in recent sessions as investors fled to the relative safe-haven currencies amid intense volatility in markets.
Demand for the euro was also underpinned by investors borrowing the low-yielding currency to fund investment in risk assets.
But concerns over whether a free fall in China’s stocks will make the world’s second-largest economy weaker persisted. Shares in Shanghai opened higher on Wednesday, before ending down 1.3% in a volatile session.
Recent steep declines in Chinese equity markets have sparked fears that they will hasten an economic downturn and undermined investor confidence in the government’s ability to revitalize economic growth.
