The dollar fell against the euro and the yen today in thin post-Easter trade as investors remained on edge about the credit crisis despite a recovery in stock prices.
The US currency fell back towards the psychologically key 100 yen mark and lost around 0.7 per cent on the day versus the euro, giving up earlier gains made after better-than-expected US housing data had revived some optimism towards the US economy.
The dollar had rallied broadly yesterday also on news that JPMorgan had raised its offer for Bear Stearns, which lifted Wall Street and boosted investor appetite for risk.
The Australian dollar rose against the US dollar and the yen on better appetite for higher-yielding currencies as many regional shares tracked US stocks higher.
But most investors refrained from returning to risky trades as such recoveries in risk appetite have proved to be short-lived since the credit market crisis erupted last August.
Traders said investors who bought the dollar to close positions before the holidays have resumed selling the US currency, as credit jitters lingered despite the Federal Reserve's aggressive efforts last week to boost liquidity in the financial system.
Many European financial markets reopen today after the long Easter holidays.
The euro jumped 0.7 per cent to $1.5540 from late US trade last night after falling as low as $1.5341 on electronic trading platform EBS the previous session.