Yen Drops for Second Day as Rally in China's Stocks Helps Aussie

  • Yen falls after rising as much as 0.3% against the dollar
  • Aussie strengthens amid better-than-expected jobs report

The yen declined, erasing a gain of as much as 0.3 percent against the dollar, after a recovery in Chinese equities curbed demand for haven assets.

Australia’s dollar also rebounded after dipping to a four-month low versus the greenback, supported by a smaller drop in employment than economists predicted. Japan’s currency has gained in six of the past eight sessions against its U.S. peer as the cheapest oil in 12 years and persistent concerns about Chinese growth reduced the odds of a first-quarter increase in the Federal Reserve’s benchmark interest rate. China earlier kept the yuan reference rate stable for a fifth day, helping alleviate concerns about a rapid devaluation.

“Dollar-yen will probably continue to be driven by moves in the yuan, oil and stocks,” said Masafumi Yamamoto, chief currency strategist in Tokyo at Mizuho Securities Co.

The yen slipped 0.3 percent to 117.97 per dollar as of 7:26 a.m. in London, trimming its advance this year to 1.9 percent. The Aussie added 0.2 percent to 69.66 U.S. cents after falling to 69.19, the least since Sept. 7.

China’s CSI 300 Index closed 2.1 percent higher, after earlier dropping as much as 2.7 percent. It has lost 14 percent this year.

Investors have been flocking to the safe-haven yen and sovereign bonds as risk aversion sparked by a run of surprise yuan devaluations failed to dissipate even after China moved to stabilize the currency. The yield on Japan’s benchmark 10-year government bond dipped to a record low of 0.19 percent Thursday.

The Aussie recovered as the turnaround in Chinese stocks improved the outlook for the South Pacific nation, after data earlier showed a smaller loss in jobs than economists had forecast. Australian employers cut 1,000 jobs last month, compared with the median forecast for a 10,000 reduction, while the unemployment rate was unchanged at 5.8 percent.

“This is a report which the RBA will be quite happy with,” said Joseph Capurso, a strategist at Commonwealth Bank of Australia in Sydney, referring to Australia’s Reserve Bank.

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