Germany’s Aaa credit-rating outlook was increased to stable from negative by Moody’s Investors Service, which cited increased cooperation among European Union members to reduce economic contagion in the region.
The euro advanced the most in almost four weeks against the dollar as a measure of manufacturing in the region rose to the highest in more than 2 1/2 years, boosting optimism that growth in Europe is gathering pace.
Treasuries rose the most in almost two weeks, pushing the 10-year note yield further below the level when the Federal Reserve voted last month to taper its bond purchases, as reports showed an uneven economic expansion.
The euro fell for the first time in five days versus the dollar amid bets the region’s economy will trail that of the U.S., spurring the European Central Bank to keep interest rates low as the Federal Reserve slows stimulus.
Canada’s dollar posted its biggest decline in five years as accelerating economic growth in the U.S. convinced the Federal Reserve to slow monetary stimulus even as the Bank of Canada warned of deflationary risks.
The euro reached the strongest level since October 2011 against the dollar after European Central Bank Governing Council member Jens Weidmann said keeping interest rates low may endanger political reforms.