The justice ministry has taken the sternest stance on digital currencies among South Korean ministries but other government agencies reportedly oppose an outright ban on bitcoin and other virtual currency trading.
The dollar nursed its losses against the yen on Thursday, having suffered its biggest one-day drop in almost eight months following a report that China was ready to slow or halt its purchases of U.S. Treasuries.
"We think it is either a quote from some wrong sources, or a piece of fake news", a SAFE spokesperson said in the statement (link in Chinese). The report sent US Treasury yields to 10-month highs and the dollar lower.
SAFE officials noted that "the handling of China's foreign reserves investment in United States bonds is professionally managed according to market activity, on the basis of market conditions and investment needs".
The report sent USA 10-year Treasury yields to 10-month highs and dented the dollar on Wednesday, which slid almost 1.1 percent on trading platform EBS, its biggest one-day percentage fall versus the yen since last May. The VIX implied volatility index, the markets' so-called "fear gauge", hovered just above 10 on Thursday, from as low as 8.92 on January 2.
The German 10-year bond yield rose 4.1 basis points to 0.520%, more than a five-month high. China's State Administration of Foreign Exchange didn't immediately reply to a fax seeking comment on the matter. "It is possible too that China wants to signal to its people that it will not keep financing the US when the U.S.is not treating China with respect", Mr. Setser said.
Ivascyn said shorter-dated U.S. Treasuries are "looking more interesting at these levels" and that Pimco "prefers (the) front end" of the U.S. Treasury yield curve.
The euro traded at $1.1945, almost flat on the day, and holding above Tuesday's low of $1.1916.
The largest currency market move has come from the Japanese yen with the USD/JPY sitting up 0.26% at 117.71, recovering after hitting a low of 111.33 earlier in the session. A steady exchange rate suggests limited pressure on Chinese authorities to add Treasuries as part of intervening in currency markets.
The, which measures the greenback's strength against a trade-weighted basket of six major currencies, 0.23% to 92.02 by 11:56 AM ET (16:56 GMT). The debt is becoming less attractive compared with other assets and trade tensions with the USA may provide a reason for the shift, the thinking of the officials goes, according to the people. It takes a dramatic change in the fundamental outlook for US fiscal and monetary policy (think Donald Trump's election victory most recently) or turmoil in riskier assets to really jolt bonds one way or the other.
Brent crude futures traded at $69.03 a barrel, down 17 cents, after rising as high as $69.37 on Wednesday, the highest since May 2015.