Yen steadies in Asia

The yen steadied on Wednesday as investors gave the dollar a wide berth on the back of a decline in US Treasury yields and as it drew bids amid risk aversion, highlighted by concerns about China's economic growth. The dollar index was at 80.169, after going as low as 80.016 on Tuesday with some traders pointing to mixed US data as a reason for its fall.
After going as low as 102.01 yen the previous day the dollar stood at 102.33 yen, well below a three-week high above 102.80 yen hit on Friday. The dollar hit the three-week high after upbeat jobs-related data, but recent indicators on the whole have painted a bleaker picture for the US economy and weighed on the greenback.
Asian markets were again focused on China, where the yuan has seen a surge in volatility on suspected moves by the central bank to curb speculative betting on the currency ahead of reforms. The dollar was last at 6.1270 compared with levels closer to 6.0600 just a week ago. Spot yuan has entered a dramatic weakening cycle in recent weeks, guided downward by a series of weak fixings by the central bank, with additional momentum added to the slide by the unwinding of yuan positions by Chinese banks.
Many market watchers see the move as a prelude to a widening of the yuan's trading band and believe the currency's longer-term uptrend remains intact, despite recent data showing the economy is losing steam. "Chinese macro economic risk is a factor capping the dollar against the yen," said Shusuke Yamada, chief Japan currency strategist at Merrill Lynch Japan Securities.
"Macro economic risks from the US, China and Japan have grown significantly. That said, such risks are unlikely to fully materialise until key data releases in April, and the dollar is likely to be range bound until then," Yamada said. The euro firmed a touch to $1.3741 but was still well within a slim $1.3685/1.3774 range seen for a week now. Against the yen, the common currency stood at 140.60, extending its pullback from a one-month high of 141.29 touched on Friday. The Australian dollar, a liquid proxy for China plays, last traded around 90 US cents, having eased a third of a cent overnight.