Dollar mixed as dealers eye tumbling Chinese equities
The dollar rose against the euro but slid against the yen on Wednesday as another large drop in the Chinese stock market persuaded some investors to sell risky assets, dealers said.
Approaching midday trade in London, the euro fell to 1.4102 dollars from 1.4132 dollars in New York late on Tuesday.
Against the Japanese unit, the dollar dipped to 94.33 yen from 94.70 yen late Tuesday.
"The foreign exchange market is being influenced by global share prices, particularly the Shanghai market," said Yosuke Hosokawa, head of foreign exchange at Chuo Mitsui Trust Bank.
"Prospects for the global economy are still uncertain," he noted, adding that the safe-haven yen rises when shares drop -- and trigger selling of risky assets.
Chinese shares tumbled 4.30 percent on Wednesday as resources companies plunged amid concerns over declining international commodity prices, dealers said.
The Shanghai Composite Index, which covers A and B shares, was down 125.30 points at 2,785.58 on turnover of 122.3 billion yuan (17.9 billion dollars).
"A lack of economic data today will not provide (the market) with any fresh direction," added Calyon analyst Stuart Bennett in London on Wednesday.
"The focus will remain on equities, and as long as the European markets do not 'over analyse' a weak performance for Chinese stocks, which has managed to underpin the yen, and decide to sell, small gains in equities should prove enough to keep the dollar under pressure against most currencies."
Traders were meanwhile mulling a mixed batch of data. US home construction activity saw a surprise decline in July, with both new starts and building permits falling, the Commerce Department said Tuesday.
But in Germany, the closely watched ZEW index of investment sentiment rose 16.6 points to 56.1 points, well ahead of analyst forecasts.
"It's almost certain that the global economy is through the worst phase," Hosokawa added. "Now we are at the next stage, where we will see a zigzag trend for the time being before reaching a full recovery."
In London on Wednesday, the euro was changing hands at 1.4102 dollars against 1.4132 dollars late on Tuesday, at 133.02 yen (133.85), 0.8604 pounds (0.8533) and 1.5190 Swiss francs (1.5200).
The dollar stood at 94.33 yen (94.70) and 1.0771 Swiss francs (1.0753).
The pound was at 1.6388 dollars (1.6579).
On the London Bullion Market, the price of gold edged up to 935.49 dollars an ounce from 935 dollars an ounce late on Tuesday.