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Dollar slips as markets recover; China data helps

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LONDON (Reuters) - The dollar edged lower across the board on Thursday, as risk sentiment stabilized after resilient Chinese trade data and Beijing's efforts to slow a slide in the value of the renminbi encouraged investors to buy riskier currencies.

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.

Against a basket of currencies (DXY) the dollar was broadly steady at 97.58, but it weakened 0.1% versus the Australian dollar and the British pound

"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 (PA:CAGR) 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 yen was a tad firmer at 106.185 per dollar. It touched 105.500 yen 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 kiwi nudged up 0.1% to $0.6452, following a slide to a 3-1/2 year low of $0.6378 on Wednesday after the rate cut.

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