[SYDNEY] The yen nursed losses early on Monday, having retreated from its highest in over a year as a rally in European and US stocks late last week dulled demand for the safe-haven currency.
But there was not much follow-through yen selling in Asia yet as investors kept a nervous eye on Chinese financial markets, which reopen after a week-long holiday.
The dollar was up a touch at 113.64 yen, having pulled away from a 15-month trough just under 111.00. The euro fetched 127.61 yen, up from a 2-1/2 year low of 125.795. "The China equity market's reaction to last week's turmoil as well as the degree, if any, of a lower USD/CNY fixing could set the tone for the week," said Rodrigo Catril, FX strategist at National Australia Bank.
Adding to the suspense is China's trade data due later in the day. A disappointing outcome could easily re-ignite flight-to-safety flows.
Perhaps in an effort to head off any adverse reaction from Chinese investors, central bank governor Zhou Xiaochuan said there was no basis for the yuan to keep depreciating.
In the well-timed interview, carried in the Chinese financial magazine Caixin over the weekend, Mr Zhou also said China would keep the yuan basically stable versus a basket of currencies while allowing greater volatility against the US dollar.
For now though, investors were still soothed by a welcome bounce in US consumer spending last month, which offered hope the economy was picking up after slowing to a crawl at the end of 2015.
The data helped the greenback regain some ground versus the euro. The common currency was last at US$1.1233, having slipped from a 3-1/2 month peak of US$1.1377.
Commodity currencies put in a mixed performance. The Australian dollar kept its head above 71 US cents, while the kiwi was at US$0.6625, having slipped from Friday's high of US$0.6740.