* Yuan down against dollar and yen
* Yen benefiting more broadly, also helped by Ukraine
* U.S. CPI, housing-related data awaited
LONDON, March 18 The yuan deepened its month of
losses against the dollar on Tuesday amid more signs China's
problems with a slowing economy and heavily indebted corporate
sector is becoming this year's big issue for markets.
Reversing one of the past decade's few sure bets in the
foreign exchange market, the yuan is now down more than 2.3
percent in the past month. That move has resumed since officials
widened their trading band for the currency over the weekend.
Japan's yen, which some players in Asia say is now
benefiting most strongly amongst major currencies from the
yuan's fall, was up more than half a percent against the Chinese
currency, pulling it higher against the dollar.
A survey of 970 global investors by Barclays showed that
China's problems have replaced the U.S. Federal Reserve's
reining in of monetary policy as the biggest concern for market
players since the start of 2014.
A trader in Shanghai said he thought the yuan, which is not
fully convertible internationally and trades in a complicated
system of "offshore" and Chinese "onshore" rates, would head
towards 6.2360 against the dollar.
It fell another 0.2 percent to 6.1761 on Tuesday.
Much of the play in Asia on the currency, however, has focused
on the yen. The Chinese currency was almost half a percent lower
against its Japanese counterpart at 16.425.
Dealers say that many of those who were betting strongly on
further gains for the yuan are still to be shaken out and that
the currency could still go sharply lower in coming weeks.
"There are these structures that everyone talks about and
that still holds the potential to take the yuan lower," said one
dealer in London.
There was little change overnight in the situation in
Ukraine, which has occupied much of market attention in the past
two weeks. The yen was hurt on Monday after Western powers took
only minimal steps against Russia over its support for a
separatist referendum in Crimea viewed by many internationally
On Tuesday, the yen gained 0.4 percent against the dollar in
early European trade to 101.35.
"We've seen some easing off of the relief rally we saw
yesterday but it is going to stay at the top of the market's
list of concerns," said Lee Hardman, strategist with Bank of
Tokyo Mitsubishi-UFJ in London.
"Right now we're in a kind of stalemate situation and
generally we just need to see how it develops. Russia could
clearly decide to take reciprocal action at some stage which
might for example have knock-on effects for the euro zone."
With Crimea seemingly set to split from Ukraine, market
players are watching eastern Ukraine and the possibility of
Moscow's involvement in the region with a large population of
Market players said any re-emergence of tensions would
support the yen and Swiss franc.
One possible resistance level for the dollar against the yen
now lies around 102.30 yen, said Philip Wee, senior currency
economist for DBS Bank in Singapore.
The dollar's 20-day moving average now lies roughly around
102.30 yen, while the 100-day moving average comes in slightly
above that level, around 102.38 yen.
Against the Swiss franc, the dollar traded at 0.8733.
The dollar had hit a 2-1/2-year low of 0.8698 against the Swiss
franc last week on trading platform EBS, but has since pulled up
from that trough as investor risk aversion ebbed.
The dollar index, a measure of the greenback's value against
six major currencies, was at 79.402, above a four-month low of
79.268 hit last week.
Investors will watch the U.S. consumer price index and
housing-related dated due later in the session for clues to the
dollar's likely direction.