* Stronger yuan boosts risk appetite
* U.S. labels China a currency manipulator
* Dollar gains a fter falling to two-week lows
(Adds new comments, byline, updates prices)
By Karen Brettell and Gertrude Chavez-Dreyfuss
NEW YORK, Aug 6 (Reuters) - The Chinese yuan strengthened and demand for safe-haven currencies like
the Japanese yen and Swiss franc eased on Tuesday, as China appeared to take steps to stabilize its
currency which breached a key level on Monday and sparked broad risk aversion.
The dollar rebounded after falling the previous session, benefiting from relative calm in the market.
Stocks and emerging market currencies plunged on Monday and safe havens jumped after China authorities
allowed the yuan to break through the psychologically important level of 7 per dollar, its lowest since
the 2008 financial crisis.
Risk appetite, however, improved on Tuesday after the People's Bank of China fixed the daily reference
rate for the onshore Chinese yuan at 6.9683, firmer than the expected 6.9871, and below the key 7 rate.
The central bank also said it was selling yuan-denominated bills in Hong Kong, a move seen as
curtailing short selling of the currency. "Beijing's move today to set a stronger exchange rate for the yuan helped stabilize markets," said Joe
Manimbo, senior market analyst at Western Union Business Solutions in Washington. "Still, the market bias
remains fraught with nerves, boding well for haven assets."
Onshore yuan CNY= stayed above 7, but gained 0.3% against the dollar, which fell to 7.023 yuan,
after rising as high as 7.0575 overnight.
The offshore yuan CNH= was also up, rising 0.6% against the dollar.
Escalating tensions between the United States and China are likely to keep investors cautious with no
end in sight to the trade conflict between the world's two largest economies.
That tension increased after the U.S. Treasury department announced late on Monday it had determined
for the first time since 1994 that China was manipulating its currency and said that Washington would
engage the International Monetary Fund to clamp down on Beijing. China's central bank responded on Tuesday that China "has not used and will not use the exchange rate
as a tool to deal with trade disputes."
In other currencies, the dollar rose 0.1% against a basket of currencies to 97.645 .DXY , climbing
from two-week lows hit after the yuan's fall on Monday.
It recovered as well from Monday's seven-month low against the safe-haven yen. In afternoon trading,
the dollar was last at 106.56 yen JPY= , up 0.6%.
The dollars recouped losses against the euro, which slipped 0.1% to $1.1193 EUR= .
Yield spreads have narrowed in favor of the euro, with the single European currency at an advantage as
market participants repriced the risk of additional easing from the Federal Reserve, Scotiabank said in a
research note.
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Currency bid prices at 3:33 PM (1933 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1196 $1.1202 -0.05% -2.38% +1.1249 +1.1169
Dollar/Yen JPY= 106.5100 105.9400 +0.54% -3.40% +107.0700 +105.5300
Euro/Yen EURJPY= 119.25 118.68 +0.48% -5.52% +119.8500 +118.3800
Dollar/Swiss CHF= 0.9771 0.9733 +0.39% -0.44% +0.9792 +0.9704
Sterling/Dollar GBP= 1.2157 1.2141 +0.13% -4.70% +1.2209 +1.2135
Dollar/Canadian CAD= 1.3278 1.3213 +0.49% -2.63% +1.3291 +1.3187
Australian/Doll AUD= 0.6758 0.6756 +0.03% -4.13% +0.6801 +0.6751
ar
Euro/Swiss EURCHF= 1.0940 1.0903 +0.34% -2.79% +1.0953 +1.0898
Euro/Sterling EURGBP= 0.9208 0.9223 -0.16% +2.49% +0.9249 +0.9157
NZ NZD= 0.6521 0.6526 -0.08% -2.92% +0.6585 +0.6510
Dollar/Dollar
Dollar/Norway NOK= 8.9058 8.9270 -0.24% +3.09% +8.9299 +8.8915
Euro/Norway EURNOK= 9.9712 10.0008 -0.30% +0.66% +10.0212 +9.9424
Dollar/Sweden SEK= 9.5885 9.6018 -0.22% +6.97% +9.6095 +9.5698
Euro/Sweden EURSEK= 10.7366 10.7598 -0.22% +4.60% +10.7683 +10.7056