USD Falls on China Fears - JPY Helped by Fukui

The USD is lower as more talk of China diversifying its USD1 trillion of reserves.

The JPY is helped by a warning from Bank of Japan Governor Toshihiko Fukui about the risks of a snap back in carry trades. But an unexpected fall in Japanese machinery orders helps to keep a lid on JPY gains.

The USD is down at Y117.36 as the EUR climbs to $1.2881, helped by European Central Bank board member Lorenzo Bini Smaghi's comment that rates are too accommodating in the euro zone. The GBP rises to $1.9146.