Dollar stabilizes and the yuan rises on the back of strong Chinese data

The dollar stabilized in Asian trading on Friday, retreating slightly from the gains it achieved on Thursday against other major currencies, while the yuan rose following the release of some strong economic data from China.

The dollar jumped on Thursday after US retail sales received a boost from a 0.6 percent rise in gasoline prices in August, contrary to expectations for a 0.2 percent rise. While investors welcomed the European Central Bank’s decision to raise interest rates by 25 basis points.

The dollar index fell in the latest trading to 105.25 points, but it is still near its highest level in six months, which it recorded on Thursday at 105.43.

The euro remained near its lowest level in several months, reaching $1.0632 on Thursday.

The yuan and the Australian and New Zealand dollars received a boost after a batch of Chinese economic data on some key indicators came in better than expected, lifting sentiment.

The yuan rose in transactions outside China by more than 0.3 percent to about 7.262 against the dollar after the data was released.

The yuan fell on Thursday after the People’s Bank of China announced that it would reduce the reserve requirement ratio for banks this year by 25 basis points.

Although the move is intended to maintain ample liquidity and support the fragile economic recovery, it may further depreciate the already struggling yuan as domestic interest rates fall further.

Rodrigo Catril, chief foreign exchange strategist at National Australia Bank, said the People’s Bank of China had provided “piecemeal” stimulus, but the economy was still suffering from consumer confidence.

The Australian dollar rose 0.5 percent to $0.6473, and the New Zealand dollar increased in the latest trading 0.3 percent to $0.5931.

The euro rose 0.1 percent to $1.0652, slightly away from its lowest level in six months at 1.0632 against the dollar, after the European Central Bank raised interest rates by another 25 basis points at its monetary policy meeting on Thursday.

The pound sterling increased more than 0.1 percent to $1.2429, hovering above its lowest level in three months.

The yen remained close to 147.39 against the dollar in Asian trading on Friday morning.