Investing.com - The dollar moved higher against the yen on Thursday as late gains in Chinese stocks bolstered investor sentiment and dampened demand for the safe-haven yen.
USD/JPY rose 0.2% to 120.15 from 119.91 late Wednesday. The pair ended that session with gains of 0.9% after rebounding from seven-month lows earlier in the week.
Asian equities were higher and shares in Shanghai rallied around 5% by the close of trading, snapping six days of heavy losses.
Market sentiment was helped after a senior Federal Reserve official played down prospects for an interest rate hike next month.
New York Fed President William Dudley said Wednesday the case for a September rate hike was “less compelling”, given the threat posed to the U.S. economy from recent turmoil in markets.
Steep declines in Chinese equity markets over the past week have sparked fears over a China led slowdown in global economic growth.
The turmoil in markets began when China unexpectedly devalued the yuan earlier this month, sparking fears that the economy may be slowing at a faster than expected rate.
The euro edged higher, with EUR/USD at 1.1324 following steep losses on Wednesday.
The single currency fell around 1.7% after the European Central Bank warned that the risk to its medium-term inflation target has increased and it is prepared to expand its economic stimulus program if necessary.
The single currency rose to seven-month highs earlier in the week as investors fled to the relative safe-haven currencies amid intense volatility in markets.
Investors have also been borrowing the low-yielding euro to fund investment in risk assets.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 95.27, having rebounded from the Monday’s seven-month trough of 92.52.