The dollar and the Swiss franc weakened against the euro for the first time in four days as Asian stocks rose and Treasuries declined amid renewed demand for higher-yielding assets. The U.S. currency slid against the Australian and New Zealand dollars as China’s economic growth exceeded analysts’ estimates and minutes from a Federal Reserve meeting showed some policy makers felt additional U.S. stimulus may be needed. The euro was stronger against all but two of its 16 major peers monitored by Bloomberg as Italian and Spanish bonds rose for a second day. The yen weakened versus the 17-nation currency amid speculation Japan will sell its currency to support exporters. “We saw broadly better-than-expected Chinese data and that has give the market a little bit of comfort,” said Sara Yates, a foreign exchange strategist in London at Barclays Plc. “For the U.S., interest-rate hikes are a long way into the future. We still look for the euro to grind higher but there are still significant risks.” The dollar weakened 0.8 percent against the euro to $1.4081 as of 10:23 a.m. in London, after reaching $1.3837 yesterday, the strongest since March 11. The Swiss franc slid 0.8 percent to 1.1704 per euro. The yen dropped 0.8 percent to 111.60 per euro. Japan’s currency was little changed at 79.27 per dollar, after gaining 2.5 percent in the previous three days. It rose to 78.50 earlier today, the most since policy makers jointly intervened in foreign-exchange markets in March. Chinese GDP The MSCI Asia Pacific Index of equities rose 0.9 percent and the Stoxx Europe 600 Index snapped a run of three straight declines. Futures on the Standard & Poor’s 500 Index were 0.7 percent higher and the yield on 10-year Treasuries increased six basis points to 2.94 percent. China’s gross domestic product increased 9.5 percent in the second quarter from a year earlier, the statistics bureau said in Beijing. The median estimate was 9.3 percent in a Bloomberg News survey of economists. Industrial output advanced 15.1 percent in June, the most since May 2010. Today’s economic data “does break the recent string towards disappointment from numbers out of China,” said Todd Elmer, head of Group-of-10 currency strategy for Asia ex-Japan at Citigroup Inc. in Singapore. “It could help to ease some of the downward pressure on the Aussie and kiwi.” Australia’s dollar rose for the first time in four days, strengthening 0.8 percent to $1.0677, and gained 0.8 percent to 84.64 yen. The New Zealand currency advanced 1 percent to 82.63 U.S. cents. Fed Minutes IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six U.S. trading partners including the euro, yen and pound, slid for a second day. Fed policy makers disagreed on whether additional monetary stimulus will be needed, minutes of their meeting last month showed yesterday. “A few members noted that, depending on how economic conditions evolve, the committee might have to consider providing additional monetary stimulus,” the Federal Open Market Committee said in the minutes of its June 21-22 meeting. “On the other hand, a few members viewed the increase in inflation risks as suggesting that economic conditions might well evolve in a way that would warrant” the FOMC “taking steps to begin removing policy accommodation sooner than currently anticipated.” Yen Intervention Italian bonds rallied for a second day, pushing the yield on the 10-year security down 12 basis points, and easing concern that the region’s debt crisis may spread beyond Greece, Ireland and Portugal to larger economies. The yen fell versus all but one of its major counterparts after Finance Minister Yoshihiko Noda said its moves have been “a bit one-sided.” Japan’s Chief Cabinet Secretary Yukio Edano echoed Noda’s comments, saying rapid foreign-exchange moves were not “desirable.” Group of Seven nations jointly sold Japan’s currency on March 18 after the yen surged to a postwar record of 76.25 per dollar the previous day, threatening the nation’s recovery from the March 11 earthquake and tsunami. “The market is cautious about a possible intervention,” said Daisaku Ueno, Tokyo-based president of Gaitame.com Research Institute Ltd., a unit of Japan’s largest online currency broker. To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Paul Dobson in London at pdobson2@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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