The yen weakened broadly on Monday, continuing to give back some of last week's hefty gains in a turnaround sparked by the US Federal Reserve's surprise decision on Friday to cut its discount lending rate.
The Fed's action jammed the brakes on the unwinding of carry trades based on borrowing the low-yielding yen, although investors waited cautiously to see how far nerves have settled over troubles in the credit sector.
The dollar regained a footing above 115 yen and the euro jumped back above 155 yen, while willingness to take on risk again gave the high-yielding Australian and New Zealand dollars a boost back to $0.80 and $0.70, respectively.
But these moves and the rebound in global equity markets did not reflect a uniform assumption the Fed has succeeded entirely in calming financial markets or eliminated fears tighter credit conditions could crimp economic growth. "What we have seen is a relief rally," said Teis Knuthsen, head of FX research at Danske Markets in Copenhagen.
"The markets are reeling in the aftermath of the Fed rate move on Friday and we are in the midst of a serious financial crisis, the end of which we have not yet seen." At 1130 GMT the dollar was up 0.6 percent on the day at 115.05 yen, having fallen to a 14-month low of 111.58 yen on Friday, according to Reuters data.
The euro was up 0.6 percent against the yen at 155.07 yen, after falling below 150 yen on Friday, and was up 0.1 percent against the dollar at $1.3484. The high-yielding New Zealand dollar - the biggest loser last week in the carry trade unwind frenzy - rebounded a little, gaining 0.15 percent against the dollar to $0.6973 and the Australian dollar recovered 0.6 percent to $0.8031.
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