* China-led rally fades with no follow-through
* Doubts surface about impact of China's yuan move
* Dollar/yen rises, boosted by Aussie/yen, kiwi/yen gains
(Recasts; updates prices, adds quote)
By Gertrude Chavez-Dreyfuss
NEW YORK, June 21 (Reuters) - The euro fell against the
U.S. dollar on Monday, while the Australian and New Zealand
units pared gains, as yuan-induced euphoria faded amid doubts
over the overall impact of China's pledge for a more flexible
Beijing's announcement over the weekend, which should boost
purchasing power and demand in the the world's third largest
economy, initially fueled a market rally worldwide. The
currency move was seen helping global companies that sell to
China and underpinning commodity-linked currencies such as the
But the rally ebbed with no follow-through buying, analysts
said, with China's move seen as having a minor impact and
undertaken primarily for political purposes.
China on Monday ruled out a one-off revaluation and said it
will reform its exchange rate regime in a gradual manner.
"It's basically inertia where the moves are not progressing
and people have turned around and took it the other way. I
would say the lack of follow-through after the China-fueled
rally is leading to some risk aversion," said Brian Dolan,
chief currency strategist at Forex.com in Bedminster, New
"I think people are concluding that the China news would be
a minor thing primarily for diplomatic window-dressing. China
is doing this ahead of the G20 meeting primarily to defuse the
situation there and hope that the G20 talks about other
Leaders of the Group of 20 leading industrialized and
developing economies are to meet next week in Toronto, where
global trade imbalances are expected to be a key issue.
Main yuan coverage [ID:nCHINATAKE]
Winners and losers from a firmer yuan [ID:nTOE65K02D]
Reuters insider: link.reuters.com/nyq23m
EURO FAILS TO GET ABOVE $1.2350
In late New York trading, the euro fell 0.6 percent against
the dollar EUR=EBS to $1.2313, after earlier trading to a
one-month high at $1.2490, according to electronic trading
platform EBS. Traders sold the euro after it failed to get
The single currency in recent months has moved with swings
in risk appetite. On Monday, the 25-day rolling correlation
between the euro and the S&P 500 was still at a robust 54
"The breakdown now leaves a potential key reversal pattern
unfolding. A close below ($1.2354) would signal an immediate
test on the $1.2290 and possibly as low as $1.2200," said Marc
Chandler, global head of currency strategy at Brown Brothers
Harriman in New York.
The high-yielding Australian dollar AUD=D4 gained 0.5
percent to US$0.8762, off an earlier one-month peak at
One-month AUD/USD risk reversals, a measure of currency
sentiment in the options market, were still showing a bias for
puts -- suggesting expectation of further declines -- at -4.20
vols AUD1MRR=GFI on Monday, from -4.425 last Friday. But
Aussie risk reversals have come off extreme levels.
Two weeks ago, the put bias on the Aussie traded as high
-5.875 vols, pressured by the negative global risk appetite
arising from the euro zone debt crisis.
The New Zealand dollar NZD=D4 rose 0.2 percent to
US$0.7081 after an earlier high at US$0.7153, its strongest
level since May 14.
Earlier in the session, the Chinese yuan closed at 6.7976
against the U.S. dollar, the highest closing level against the
greenback since the yuan's July 2005 revaluation and up 0.42
percent from Friday's close of 6.8262. It hit an all-time
intraday high since the revaluation of 6.7958, up as much as
0.47 percent from the central bank's mid-point, nearing its
limit of 0.5 percent. [ID:nBJD003800].
The U.S. dollar rose 0.4 percent against the yen JPY= to
90.99, boosted by steep gains in the Australian dollar/yen
cross AUDJPY=R and New Zealand dollar/yen pair NZDJPY=R.
(Editing by Leslie Adler)