US dollar, yen add to gains amid trader caution

[NEW YORK] The US dollar and yen both continued to strengthen Tuesday in a foreign exchange market dominated by caution over China's troubles and Middle East tensions.

But Beijing's reported US$20 billion intervention in capital markets following Monday's 7 per cent stock plunge helped calm global financial markets.

The US currency neared its highest level against the pound in 52 weeks, touching US$1.4639 per pound before easing back slightly.

The greenback pushed to US$1.0750 per euro, and surged 0.4 per cent against the Canadian dollar to C$1.3992, the US currency's highest level in 12 years.

The yen meanwhile rose nearly 1 per cent on the euro, to 128.00, and scored a smaller gain to 119.06 per dollar.

Despite Beijing's intervention, Boris Schlossberg of BK Asset Management said indications are that investors remain nervous about the state of the Chinese economy.

"Still, the volatility in capital markets was considerably less tumultuous and currencies stayed in narrower ranges. But the greenback continued to strengthen, resuming its role as a safe harbor trade as US bonds rallied a bit," he added.

AFP