Euro edges higher against dollar on reduced Deutsche Bank fears

September 29, 2016 8:39 PM EDT

Euro, Hong Kong dollar, U.S. dollar, Japanese yen, British pound and Chinese 100-yuan banknotes are seen in a picture illustration, in Beijing, China, January 21, 2016. REUTERS/Jason Lee

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By Sam Forgione

NEW YORK (Reuters) - The euro recovered from a nine-day low against the U.S. dollar on Friday on reduced concerns surrounding Deutsche Bank's health, while the greater calm over Germany's biggest lender pressured the safe-haven yen and Swiss franc.

Deutsche Bank's (NYSE: DB) U.S.-listed shares were last up nearly 15 percent after touching record lows on Thursday. The immediate cause of the Deutsche crisis is a fine, disputed by the bank, of up to $14 billion by the U.S. Department of Justice over its sale of mortgage-backed securities.

An AFP news agency report that the bank was nearing a cut-price settlement of $5.4 billion helped the euro recover after the currency fell to a nine-day low of $1.1153 around the start of the U.S. trading session.

"There seems to be reduced pessimism at least for the outlook for Deutsche," said Shaun Osborne, chief FX strategist, at Scotiabank in Toronto. He said the euro was finding strong demand between $1.1150 and $1.1160.

The euro was on track to gain about 0.8 percent in September to notch its best month in six and rise 1.2 percent for the third quarter after losing 2.4 percent in the second quarter.

The dollar was last up 0.34 percent against the yen at 101.35 yen after hitting a session high of 101.75 yen.

The Japanese currency was still set to gain about 1.8 percent against the dollar for the quarter to notch its third straight quarterly gain. Investors' suspicions that the Bank of Japan had reached a practical limit in stimulus and lost clout in cheapening the yen helped boost the currency over the quarter.

Soothed concerns surrounding Deutsche Bank helped the dollar hit a nine-day high against the safe-haven Swiss franc of 0.9752 franc and reverse Thursday's losses. The dollar was last up 0.49 percent against the franc at 0.9707 after hitting a more than one-month low of 0.9635 on Thursday.

"It is less painful for Deutsche Bank than some people feared," said Axel Merk, president and chief investment officer of Palo Alto, California-based Merk Investments. He cited the greater calm as a key reason for the franc's losses Friday.

The dollar index <.DXY>, which measures the greenback against a basket of six major currencies, was last down 0.09 percent at 95.449.

China's yuan was steady against the dollar, and last traded at 6.6745 in the onshore spot market . The yuan will formally become a global reserve currency on Saturday.

(Reporting by Sam Forgione; Editing by Paul Simao and Sandra Maler)

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