The dollar slid beyond $1.37 against the euro for the first time since March as evidence the worst of the global economic slump may be over pared demand for safety. Australia’s and New Zealand’s dollars gained versus the greenback as China’s investment in factories and property surged more than economists forecast, encouraging investors to buy higher-yielding assets. The pound rose to a four-month high as the U.K.’s housing slump eased and manufacturing shrank at the slowest pace in more than a year. “The dollar is pressured lower on renewed risk appetite as data starts to show the worst of the recession is behind us,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto. “The collective psyche of the market has shifted. Any pullback in risky trades is met with more bids. More and more investors are looking to getting into the market, rather than getting out of it.” The U.S. currency declined 0.5 percent to $1.3653 per euro at 9:18 a.m. in New York, from $1.3582 yesterday. It touched $1.3707, the weakest level since March 23. The euro advanced 0.2 percent to 132.65 yen, from 132.40. The dollar depreciated 0.4 percent to 97.13 yen from 97.48. The Dollar Index, which the ICE uses to track the U.S. currency against the euro, yen, pound, Swiss franc, Canadian dollar and Swedish krona, fell as low as 82, the weakest level since Jan. 9. ‘Currency Crisis’ The U.S. currency, which increased 13 percent against the euro and 28 percent against the pound in the past 12 months, will see its rally end in a “currency crisis,” according to Jim Rogers, chairman of Rogers Holdings. The advance has been driven by investors covering their short sales, Rogers said in an interview with Bloomberg Television in Singapore. A short is a bet a currency will drop. “We’re going to have a currency crisis, probably this fall or the fall of 2010,” said Rogers. “It’s been building up for a long time. We’ve had a huge rally in the dollar, an artificial rally in the dollar.” He said he prefers the euro to the dollar or the pound. The euro strengthened versus the dollar after European Central Bank President Jean-Claude Trichet said yesterday policy makers see the first signs of an economic recovery, fueling speculation the central bank will halt cuts in borrowing costs following last week’s reduction in the main refinancing rate to an all-time low of 1 percent. ‘Inflection Point’ “As far as growth is concerned, we’re around the inflection point in the cycle,” Trichet said at a press conference at the Bank for International Settlements in Basel, Switzerland. The pound rose 0.6 percent to 89.27 pence per euro and touched $1.5335, the highest level since Jan. 9 on evidence the British economy is past the worst of its slump. The Office for National Statistics said industrial production dropped in March at the weakest pace in 13 months. The Royal Institution of Chartered Surveyors said the number of real-estate agents and surveyors saying prices fell exceeded in April those reporting gains by the least since January 2008. The British Retail Consortium reported store sales climbed last month from a year earlier. “The numbers were better than expected, and there’s some relief in the market that things aren’t getting worse,” said Elisabeth Andreew, chief currency strategist at Nordea Bank AB in Copenhagen. “There’s some optimism coming back, leading to pound buying.” Australian Dollar Australia’s dollar gained 1.1 percent to 76.66 U.S. cents, from 75.86 cents, and New Zealand’s currency advanced 1.4 percent to 60.33 U.S. cents, from 60.01 cents. Urban fixed-asset investment in China climbed 30.5 percent in the four months to the end of April from a year earlier, from 28.6 percent in the first three months, the statistics bureau said today in Beijing. Overseas shipments declined 22.6 percent last month from a year earlier, the customs bureau said. The Aussie gained 6.5 percent in the past month and the New Zealand dollar rose 4.2 percent as evidence the worst of the global recession may be over spurred investors to buy currencies of commodity producers that stand to benefit from a recovery.

Source