The dollar held close to a six-month peak as jitters over China and global growth weighed on risk appetite, while the yen strengthened as Japan's top currency diplomat sent a warning about the currency after it earlier dropped to a 10-month low.

The yen strengthened by as much as 0.4% to 147.02 per U.S. dollar after Japan's top currency diplomat, Masato Kanda, said they won't rule out options if speculative moves persist, the strongest warning since mid-August.

By 1040 GMT, it stood at 147.34 per dollar, compared with 147.82 earlier in the session, which was its lowest since Nov. 4.

The Asian currency has hovered around the key 145-per-dollar level for the past few weeks, leading traders to keep a wary eye on signs of intervention by Tokyo.

Kanda, Japan's vice-minister of finance for international affairs, has been the central figure in the country's efforts to stem the sharp decline of the yen since last year.

Japan intervened in currency markets 12 months ago when the dollar rose past 145 yen, prompting the Ministry of Finance to buy the yen and push the pair back to around 140 yen.

Against a basket of currencies, the dollar was at 104.69, not far off the six-month high of 104.90 touched on Tuesday. Economic data from China and Europe on Tuesday fanned some fears of slowing global growth, pushing investors to scramble for the greenback.

The euro was last up 0.2% at $1.0739 as three influential rate-setters at the European Central Bank warned investors to not rule out a rate hike in September.

Traders are pricing in around a one-in-three chance that the central bank raises rates by 25 basis points at the September meeting and a two-in-three chance they keep rates unchanged.

Meanwhile, sterling was last at $1.2549, having touched a three-month low of $1.25285 on Tuesday.

The Australian dollar rose 0.3% to $0.6398, after diving 1.3% on Tuesday following the weak data from China and as the Reserve Bank of Australia kept rates on hold.

Source : Reuters