The dollar gained against all group-of-10 peers as fresh concerns around China's economy, coupled with news on Italy and US banks, fanned risk-averse sentiment among investors.
The Bloomberg Dollar Spot Index rose 0.5%, with the world's reserve currency advancing against all of its of Group-of-10 peers after China signaled greater tolerance for yuan weakness; the Norwegian Krone led declines against the greenback.
Treasuries and euro-area bonds rallied as investors moved cash into safety trades; the yield on the 10-year Treasury dropped 10 basis points and the equivalent rates in Germany fell 15 basis points.
Broad-based dollar purchases added to pressure on currencies including the Aussie and kiwi, after the PBOC set the yuan fixing above 7.1500 per dollar, according to Asia-based FX traders.
EUR/USD slid 0.5% with markets weighing the outlook for ECB policy as consumer expectations for euro-area inflation continued to decline in June, while remaining above the central bank's 2% target.
USD/JPY climbed 0.4% to 143.06 as data showed growth in Japanese workers' wages unexpectedly slowed, clouding prospects for the Bank of Japan to meet its sustainable inflation goal.
"The yen is weaker after the latest wage data affirmed BOJ's need to keep easing policy," said Mingze Wu, foreign exchange trader at Stonex Group. "Easy policy will continue weighing on demand for Japan's currency when the rest of the world is hiking rates".
Source : Bloomberg
