Dollar gains after volatile Asian trading

The dollar broadly rose after a volatile day of trading in Asia Tuesday as greenback-buying sentiment remained strong ahead of a Federal Reserve meeting this month when policymakers could raise interest rates.

The greenback rose to 120.03 yen from 119.34 in Tokyo on Monday afternoon, after falling sharply earlier in the day.

The euro rose to $1.1174 and 134.11 yen from $1.1136 and 132.90 yen.

In midday trading, the US unit dropped against the yen as concerns over the Chinese economy were fuelled by weak trade data.

Traders tend to buy Japan’s currency as a safe haven during times of uncertainty or turmoil.

But the dollar bounced back as Chinese shares recovered and with many investors still expecting a Fed rate hike, possibly later this month.

“The scenario of a Fed rate hike by the end of this year appears to be still intact, so dollar-buying sentiment for the longer-term remains unchanged,” said Yosuke Hosokawa, head of the forex sales team at Sumitomo Mitsui Trust Bank.

“Players are now searching for what levels (in the dollar) are likely to be reasonable ahead of next week’s” Fed meeting.

Also Tuesday, Japan said its economy shrank less than expected in the second quarter.

While the 0.3 percent contraction was slightly better than an initial 0.4 percent estimate, analysts said the still-disappointing figures were unlikely to ease calls for more central bank stimulus to counter the downturn.

In other trading, the dollar rose against a range of emerging market currencies, including the Philippine peso, Malaysian ringgit, Thai baht and Indonesian rupiah.

The dollar bought 47.04 pesos in early trade, its highest level in five years, from 46.92 pesos on Monday but it later fell back to 46.93 pesos in the afternoon.

The dollar rose to 4.3403 ringgit from 4.3320 ringgit on Monday, while it was also higher at 36.17 Thai baht against 36.04 baht, and 14,280 Indonesian rupiah against 14,262 rupiah.

The Australian dollar was at 69.75 US cents against 69.33 cents Monday, but remained at near six-year-lows.