The euro fell
towards a one-month low against the dollar on Tuesday, as risk appetite
stabilized following a volatile Monday when weak Chinese data and a
breakdown in relations between Saudi Arabia and Iran prompted a stock
market sell-off.
The dollar had hit an 11-week low against the Japanese currency JPY=
on the first trading day of the year as Chinese share prices slid and
traders ran for the traditional security of the yen and the Swiss franc.
But world stocks inched off 2-1/2 month lows on Tuesday as China pumped in an estimated $20 billion to stabilize local equity and currency markets, and the dollar was off its lows against the yen.
European bourses meanwhile opened higher after the previous day's steep losses. Against the yen, the euro fell 0.7 percent to an eight-month low of 128.55 yen EURJPY=.
The euro fell 0.3 percent to $1.0795 EUR=. It has tended recently to perform well at times of market uncertainty as investors who had held euro-funded carry positions, in which the a low-yielding currency is borrowed and then sold in favor of a riskier higher-yielding one, have bought back euros.
Traders will be watching euro zone flash inflation data due at 1000 GMT, following weaker-than-expected German and Spanish inflation numbers on Monday.
Analysts at Commerzbank said an argument could be made for further rate cuts if the data missed forecasts for a 0.3 percent annual pick-up, prompting the European Central Bank to again lower its inflation projections.
Shanghai shares managed to limp up 0.2 percent on Tuesday after Chinese regulators said they may restrict stock sales by major shareholders.
But world stocks inched off 2-1/2 month lows on Tuesday as China pumped in an estimated $20 billion to stabilize local equity and currency markets, and the dollar was off its lows against the yen.
European bourses meanwhile opened higher after the previous day's steep losses. Against the yen, the euro fell 0.7 percent to an eight-month low of 128.55 yen EURJPY=.
The euro fell 0.3 percent to $1.0795 EUR=. It has tended recently to perform well at times of market uncertainty as investors who had held euro-funded carry positions, in which the a low-yielding currency is borrowed and then sold in favor of a riskier higher-yielding one, have bought back euros.
Traders will be watching euro zone flash inflation data due at 1000 GMT, following weaker-than-expected German and Spanish inflation numbers on Monday.
Analysts at Commerzbank said an argument could be made for further rate cuts if the data missed forecasts for a 0.3 percent annual pick-up, prompting the European Central Bank to again lower its inflation projections.
Shanghai shares managed to limp up 0.2 percent on Tuesday after Chinese regulators said they may restrict stock sales by major shareholders.
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