Investing.com - The euro was little changed against the dollar on Thursday but pushed higher against the yen as fears over the threat of deflation in China and uncertainty over whether the Federal Reserve will hike interest rates this month dominated market sentiment.
EUR/USD was at 1.1205, off Wednesday’s lows of 1.1131.
Fresh concerns over slowing growth in China hit market sentiment after data on Thursday showing that while the annual rate of inflation in China edged higher in August producer prices fell at the fastest rate in six years.
Official figures showed that the prices charged by China’s manufacturers fell by an annualized 5.9% in August. It was the largest decline since late 2009 and underlined fears over weakening demand.
The news sent world stocks lower, snapping four days of gains.
Risk appetite was also hurt by data showing that Japanese machinery orders unexpectedly fell for a second straight month in July, adding to pressure on the Bank of Japan to expand its monetary stimulus program.
Meanwhile, concerns over emerging markets were underlined after Standard & Poor's downgraded Brazil’s credit rating to junk late Wednesday, citing political uncertainty and the country’s deteriorating fiscal situation.
Investors remained cautious amid uncertainty over whether the Fed will raise short-term interest rates at their upcoming policy meeting next week given recent market turmoil.
The euro moved higher against the softer yen, with EUR/JPY rising 0.27% to 135.37. The dollar also pushed higher against the yen, with USD/JPY up 0.32% to 120.89.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was fluctuating between small gains and losses and was last at 96.03.