* China's exports fall more than expected, imports shrink
* Dollar/yen retreats from 2-1/2 month high
* U.S. 10-year bond yield fall from 4-month peak
* Dollar index pulls back from 7-month high
(Updates prices, adds comments)
By Masayuki Kitano
SINGAPORE, Oct 13 The dollar pulled back from a
2-1/2 month high against the yen on Thursday after surprisingly
weak Chinese trade data stirred fresh concern about the world's
The dollar dropped to as low as 103.555 yen at one
point, down 1 percent from the day's high of 104.635 yen, which
was the greenback's strongest level since late July.
The dollar last stood at 103.84 yen, down 0.3 percent from
late U.S. levels on Wednesday.
The safe haven yen pushed higher after data showed that
China's exports denominated in yuan fell 5.6 percent in
September from a year earlier.
September dollar-denominated exports later showed that
exports fell 10 percent from a year earlier, far worse than
China's imports unexpectedly shrank 1.9 percent after
picking up in August, suggesting recent signs of steadying in
the economy may be short-lived.
The weak Chinese trade data triggered a fall in equities and
a drop in U.S. bond yields and gave a lift to the yen, a safe
haven currency that tends to rise in times of market stress.
"There have been expectations that the Chinese economy is
stabilising because of fiscal stimulus...at the same time
there's also expectations that the global trade slowdown that we
have endured seems to be coming to an end," said Sim Moh Siong,
FX strategist for Bank of Singapore.
"I think this Chinese data has challenged the expectations,"
Against a basket of six major currencies, the dollar last
stood at 97.868, having pulled back from a seven-month
high of 98.122 set earlier on Thursday.
The dollar has been supported by growing market expectations
that the U.S. Federal Reserve will raise interest rates in
December, and rising U.S. bond yields.
The U.S. 10-year Treasury yield stood at 1.7428 percent
in Asian trade on Thursday, after climbing to a
four-month high of 1.801 percent on Wednesday.
Minutes of the Federal Reserve's September policy meeting
released on Wednesday showed several voting members of the
policy committee judged a rate hike would be warranted
"relatively soon" if the U.S. economy continued to strengthen.
"Whether the latest bull phase by the dollar is real or not
depends on how the various U.S. asset markets can co-exist with
the prospects of a Fed hike," said Junichi Ishikawa, senior FX
strategist at IG Securities in Tokyo.
The euro inched up 0.2 percent to $1.1024, getting
some respite after slipping to $1.1002 earlier on Thursday, its
lowest level since late July.
Sterling fell 0.2 percent to $1.2183, after rising
about 0.7 percent on Wednesday.
Sterling had rebounded on Wednesday after British Prime
Minister Theresa May said she would give lawmakers some scrutiny
of the Brexit process and would seek "maximum possible access"
to Europe's single market.
Woes for sterling appeared far from over, however, as May
sounded less concessionary when speaking in parliament.
Sterling had set a 31-year low below $1.1500 last Friday on
worries about the possibility of a "hard Brexit" scenario that
is seen as leaving Britain out of the European Union's single
The yuan dipped to 6.7277 to the dollar after the
central bank set a weaker mid-point for the seventh session in a
row. It recently reached the key psychological mark of 6.7 after
authorities had kept it relatively steady since mid-July.
"The continued underwhelming performance of Chinese exports
adds weight to our view that the People's Bank will maintain its
recent policy of gradual trade-weighted renminbi depreciation in
coming quarters," economists at Capital Economics wrote in a
(Reporting by Masayuki Kitano and Shinichi Saoshiro; Editing by
Eric Meijer and Kim Coghill)