Dollar picks up in Asia as equity markets soar

Tokyo - The dollar rose on Wednesday with investor sentiment picking up as regional equity markets surged, while the euro won a measure of support from upbeat eurozone data.

In Tokyo, the greenback strengthened to ¥120.35 from ¥119.82 in New York, while the euro slipped to $1.1175 compared with 1.1202 in US trade.

But the 19-nation currency was higher ¥134.49 against ¥134.22, after eurozone second-quarter economic growth was revised higher on Tuesday, to 0.4% quarter on quarter, from 0.3%.

In other trading, the Australian dollar recovered from six-year lows and emerging market currencies also got much-needed support.

Investors' appetite for risk returned on a wave of rallies across global market stocks markets after they were hammered by intense volatility in recent weeks amid long-running concerns about China's economy as well as the Federal Reserve's plans to increase interest rates.

"It's a bit of a continuation of what we saw in the European and American session and that's a fairly classical risk-on move by markets," Sam Tuck, senior currency strategist at ANZ Bank New Zealand, told Bloomberg News.

"Stock markets are still doing the driving at the moment for currencies."

A disappointing US jobs report Friday clouded the outlook for a rate hike by the US central bank at its September 16 to September 17 policy meeting, with analysts still uncertain about the prospect of a rise.

Higher rates would tend to attract investors in search of better returns to dollar-denominated assets, lifting the unit.

"China seems to be the big driver at the moment," said Chris Weston, chief markets strategist in Melbourne at IG.

"As long as China is stable and equity markets there aren't in freefall, markets will generally go higher. We won't rule out more volatility ahead of the US meeting next week," he said, referring to the Fed's policy meeting.

The Australian dollar ticked up to 70.50 US cents from 69.75c late on Tuesday in Tokyo, while the greenback also slipped against the Philippine peso, Indonesian rupiah, South Korean won and Malaysian ringgit.