The euro regained its footing against the U.S. dollar on Wednesday as risk appetite soured anew late in the afternoon after Brent oil prices fell sharply, prompting steep declines in U.S. equity markets.
The yen, another currency like the euro used to fund purchases in higher-yielding assets, trimmed losses versus the dollar and rose against commodity units such as the Australian and Canadian dollars. The greenback also gained against the commodity currencies.
"Oil is leading the charge. Equities were getting a bit slippery before the drop in oil, but once oil started to turn, equities started to gain momentum to the downside," said Brad Bechtel, managing director of foreign exchange at Jefferies in New York.
"On the FX side, the dollar was better bid against commodity currencies. The euro gained as well since it has been performing well lately in times of stress," Bechtel said.
Brent oil prices slid on Wednesday, dropping below $30 a barrel for the first time since April 2, 2004. They tumbled earlier after government data showed U.S. gasoline and diesel stockpiles had increased more than expected in the past week.
In late trading, the euro rose 0.2 percent against the dollar to $1.0873, gaining after two straight days of losses.
The dollar was little changed against the yen after posting strong gains all day. It was last at 117.69 , flat on the day.
Both the safe-haven yen and the low-yielding euro tend to gain in times of market anxiety because these currencies are often used to fund investment in risky assets, and consequently rise back up when there is a retreat from those assets.
Commodity currencies fell against the U.S. dollar, which rose 0.6 percent versus the Canadian dollar to C$1.4349.
The slid 0.2 percent to US$0.6965, while the New Zealand dollar was down 0.1 percent at US$0.6528.
Earlier in the session, commodity currencies as well as the U.S. dollar versus the euro got some much-needed relief after better-than-expected Chinese trade data stabilized the yuan, easing some of the pessimism over the world's second-largest economy. That injected a sense of calm into financial markets.