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US dollar rebounds, Australian dollar firms on China data

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The dollar rebounded from a recent seven-week low against a basket of currencies on Friday as investors bought at cheaper levels, with talk about when the Federal Reserve will begin cutting back its monthly bond buying dominating market chatter.

The U.S. dollar slipped 0.6 percent to 96.18 yen, giving up some of overnight gains and edging towards a seven-week low of 95.79 yen hit on Thursday. The dollar index was last up 0.1 percent at 81.14.

U.S. 10-year Treasury yields remain below the highs above 2.70 percent seen before last week's U.S. payrolls data, and the spread between similarly-dated German and Japanese bonds have narrowed in the past few days. That has prompted investors to trim long dollar positions.

As a result, the euro hit a seven-week high of $1.3401 on Thursday and was last down 0.3 percent on the day at $1.342.

The Australian dollar, meanwhile, rose to its highest in more than a week against the greenback, bolstered by upbeat July data from China—factory output up 9.7 percent, retail sales up 13.2 percent. The Australian currency rose 1.0 percent to $0.9191, extending its 1.2 percent gain the previous day.

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