The euro and commodity currencies such as the Australian dollar gained today, as upbeat corporate earnings in the US prompted investors to buy riskier assets amid rising growth and inflation expectations.
Gains in US and European shares soothed market sentiment after nerves were rattled on Monday by S&P's warning on US credit ratings and on fears that Greece will have to restructure its debt.
Intel forecast revenues well above Wall Street's targets, sending its shares higher in after hours trade. IBM results also outpaced expectations and it raised its full-year profit forecast.
The moves showed investors continue to favour higher-yielding currencies at the expense of the dollar and yen, and a rise in Asian and European equities underscored a rebound in risk-taking sentiment.
"Investor focus is on the earnings season in the US and this is key in driving growth expectations and pushing stock markets higher. This keeps focus away from euro zone periphery right now," said Manuel Oliveri, currency strategist at UBS in Zurich.
The euro climbed 0.9 per cent to 119.45 yen, pulling away from a two-week trough of 116.49 yen hit on EBS earlier this week.
The euro rose 0.6 per cent versus the dollar to $1.4420, having clawed above short-term resistance around the $1.4365/80 area. Its next target was last week's 15-month high of $1.4521.
Samarjit Shankar, analyst at BNY Mellon, said the bank's flow indicators showed the euro was the strongest net bought currency among the G10 as its decline earlier this week gave the market better re-entry levels.
Data highlighting business activity in Germany and France continued to outpace the rest of the common currency region kept alive rate hike expectations by the European Central Bank.
The chase for yields continues to benefit the Australian dollar, which hit a fresh 29-year high of $1.0609 in early European trade. Traders said stop-losses were scattered above 1.0610.
The yen got no help from data showing that Japan logged a smaller-than-expected trade surplus in March and that exports fell more than expected year-on-year, in a sign of the disruptions caused by a massive earthquake and tsunami that struck Japan's northeast on March 11th.
"There is little doubt that this is a factor for the yen to weaken," said Daisuke Karakama, market economist for Mizuho Corporate Bank in Tokyo.
"Two factors that had supported yen strength until now are shrinking US-Japan interest rate differentials and exporter flows. Today's data shows that one of those is weakening.”
The dollar rose 0.3 per cent from late US trade yesterday to 82.79 yen. Dollar-buying by Japanese importers helped lend the dollar support against the yen, traders said.
The dollar dipped 0.4 per cent against a basket of currencies to 74.772, falling back in the direction of a 16-month trough of 74.617 set last week.
As the dollar's value falls, the price of gold hit a record high above $1,500 and silver rose to a 31-year high.
Reuters