The dollar fell against most of its major counterparts amid a rise in risk appetite after German Chancellor Angela Merkel’s government backed the European Central Bank’s bond-buying plan to curb the area’s debt crisis.
The yen strengthened versus the dollar after a report said the Bank of Japan will probably refrain from undertaking additional monetary easing at its meeting this week. New Zealand’s dollar reached a three-month high against the greenback, and Norway’s krone gained. Stocks rose, with the Standard & Poor’s 500 Index reaching its highest since May.
“We’ve seen a temporary subsiding in the risk-off trading environment,” Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp, said in a telephone interview. “The market is already very short euros and overly long dollars, so going back to a more neutral basis is consistent with what we’ve seen.” A short position is a bet a security will decline, and a long position a wager it will rise.
The US currency fell 0.3 per cent to 78.23 yen at 4:36 p.m. New York time. The greenback was little changed at $1.2396 per euro, after dropping earlier as much as 0.5 per cent to $1.2444, its weakest in a month, and rising 0.4 per cent. The shared currency lost 0.2 per cent to 96.97 yen after touching 97.80 earlier, the strongest level since July 12.