LONDON—The broad pressure on the dollar continued Friday, with the Swiss franc setting a fresh record and the euro rising to a peak not seen since late 2009 even as London markets closed to mark a royal wedding.
Data showing a pick up in euro-zone inflation underscored the diverging paths for interest rates in Europe and the U.S., lifting the euro closer to $1.49, while expectations of strong Swiss economic growth buoyed the local currency.
"It is clearly more of the same," said Simon Derrick, strategist at Bank of New York Mellon, referring to the dollar's continued weakness. "Policy in the U.S. will remain extremely easy for the foreseeable future. That means a weak dollar for now."
Trading volumes were relatively light due to public holidays in the U.K. and Japan. European markets will also be closed Monday.
"On days like these it's mainly model-driven flow; there's less of the discretionary stuff. It's more technical trading. But there's no reason why we won't see bigger moves once New York kicks in," said one London dealer.
The euro zone's inflation rate rose more than expected, reaching a 30-month high in April, strengthening the case for the European Central Bank to tighten monetary policy further. The annual inflation rate rose to 2.8% from 2.7% in March.
Analysts at Danske Bank noted that: "Relative monetary policy is expected to remain the dominating driver on the currency market and support the euro--although the recent rally is likely to lose steam."
In a note to clients, they predicted that the euro will rise past $1.50 in three and six months, although they added that this may happen sooner.
The dollar has been under siege ever since the Federal Open Market Committee on Wednesday maintained its bias toward cheap credit and Fed Chairman Ben Bernanke followed that up with comments suggesting that U.S. interest rates will stay low. News Thursday of weak U.S. gross domestic product growth in the first quarter added to the gloom.
The Swiss franc got a shot in the arm after Swiss National Bank President Philipp Hildebrand said Switzerland's economy is expanding more vigorously than anticipated.
The Swiss currency set a new all-time high against the dollar as the greenback slipped to 0.8653 francs, compared to 0.8733 late Thursday in New York. Ahead of the New York day, the dollar was at 0.8670 francs.
Meanwhile, Norway's central bank said it will buy foreign currencies worth 300 million kroner a day in May. The euro edged up against the Norwegian krone as a result.
In Asia, the Chinese yuan rose to a new high against the dollar after the Chinese central bank raised its reference exchange rate for a third straight session. On the over-the-counter market, the dollar sailed past the psychologically significant 6.5-yuan level to 6.4910 yuan.
The yuan has risen 0.9% this month, outpacing its 0.6% rise in the entire first quarter, and has accumulated a gain of 5.2% against the U.S. unit since June, when China effectively ended its currency's de facto peg to the dollar.
The Australian dollar was just short of its 29-year peak against the dollar, while the yen strengthened, taking it deeper into territory that has previously spurred central bank buying.
The euro was at $1.4865 from $1.4821 late Thursday in New York. The dollar was at ¥81.35 from ¥81.54, while the euro was at ¥120.87 from ¥120.85. The U.K. pound was at $1.6651 from $1.6640.
The ICE Dollar Index, which tracks the U.S. dollar against a trade-weighted basket of currencies, was at about 72.94 from about 73.12.
