The euro rose to the highest in more than four years versus the yen after a German report showed Europe’s economic recovery may be gaining momentum, easing speculation the central bank will cut interest rates further.
The dollar rose to a six-month high against the yen as an unexpected drop in U.S. jobless claims and a rise in leading economic indicators added to speculation the Federal Reserve may start reducing stimulus next month.
The euro fell further from a 12-week high against the dollar as European Central Bank President Jean- Claude Trichet said inflation risks are “broadly balanced,” dimming prospects for a boost in borrowing costs.
The pound fell for a second day versus the euro on speculation the Bank of England will cut its growth forecasts in its quarterly Inflation Report tomorrow, underlining the case for keeping interest rates at a record low.
The yen weakened against most major counterparts and the dollar fell as regulators gave banks years to comply with new capital rules and Chinese data showed sustained economic expansion, sapping demand for safer assets.