Investing.com - The dollar was holding steady against a currency basket on Thursday, as strong Chinese export figures and a move by Beijing to limit a decline in the yuan calmed investor nerves over the renewed escalation in the U.S.-China trade war.
Data showed Chinese exports rose 3.3% in July from a year earlier, while analysts had looked for a fall of 2%, and policymakers fixed the daily value of the yuan at a firmer level than many had expected, even though it was beyond the 7 per dollar level for the first time since the global financial crisis.
The U.S. dollar index, an index that tracks the greenback against the euro, yen, sterling and three other currencies was little changed at 97.30 by 03:48 AM ET (07:48 GMT).
"The recent comments from Chinese officials suggest they want to stabilize their currency, otherwise a sharp currency drop may fuel capital outflows," said Manuel Oliveri, an FX strategist at Credit Agricole in London.
"The other factor helping risk sentiment is a growing swathe of central bank cuts."
This week, New Zealand joined India and Thailand in cutting interest rates, with market expectations growing that other major central banks will join in further easing monetary policy.
Indeed, market expectations for more than a quarter point rate cut from the U.S. Federal Reserve in September is still firmly baked into bond markets, despite an overnight bounce in global markets.
Those expectations forced the dollar to weaken also against the euro and the yen.
The dollar was down 0.14% at 106.10 yen. The Japanese currency hit 105.50 overnight, its strongest level since Jan. 3, before pulling back slightly.
"The yen's appreciation versus the dollar may have slowed for now, but it stands to keep gaining in the longer term," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo. "Its other peers, notably the antipodean currencies, have weakened severely and this provides overall support to the yen."
The New Zealand dollar was up 0.23% to 0.6458, following a drop to a three-and-a-half year year low of 0.6378 on Wednesday after the rate cut.
--Reuters contributed to this report