The euro bounced on Wednesday, gaining a reprieve from this week's sell off, while commodity currencies rose after upbeat Chinese data comforted investors fretting that the eurozone debt crisis could trigger a global slowdown. But concerns about the crisis spreading to the region's core economies like Italy are likely to keep euro gains in check, with the focus shifting to an emergency summit of European Union leaders expected on Friday.
The single currency was up 0.6 percent at $1.4066, easing slightly from a session high of $1.4111. Traders said it was helped by steady buying from sovereign investors, a narrowing of peripheral euro zone debt spreads over German Bunds and a bout of short covering. The buying helped it recover from a four-month low around $1.3838 hit on Tuesday. Immediate support is seen around $1.3907, the 200-day moving average, then the recent trough, followed by the March low of $1.3740/50.
Commodity currencies advanced after the Chinese data, with the Australian dollar gaining 0.7 percent to $1.0673. The New Zealand dollar rose 1 percent to $0.8256. The euro also rebounded against the Swiss franc, rising 0.8 percent to 1.1688 francs, off Tuesday's record low of 1.1555. Against the yen, the euro gained 1.4 percent to 111.59 yen.
The yen, which has benefited from safe-haven flows on the back of the euro's woes, hit a four-month peak against the dollar and many other currencies in thin early Asian trade. It gave up those gains as overall risk appetite showed signs of improving. The dollar briefly fell to 78.48 yen as stop-loss orders, mainly from Japanese retail traders, were triggered in thin volumes a few hours before Asian trading became active.
The dollar later bounced back to around 79.30 yen, up 0.7 percent on the day, helped by selling from Japanese investors. Still, the greenback has broken below support around 79.50 yen for the first time since mid-March, when Japanese officials and other major central banks had to intervene to curb the yen.