NEW YORK—The euro surged to a four-week high versus the dollar as investors are optimistic European leaders will hammer out a resolution to the region's debt crisis over the weekend.
The euro climbed to $1.3855, its highest level since Sept. 16, compared with $1.3777 late Thursday. It was recently trading at $1.3849.
The yen fell sharply against the dollar as Japanese government officials said they would take new steps against a strong yen as early as next week.
The measures could include an increase in funds for encouraging Japanese firms to take advantage of the strong yen to acquire overseas businesses and natural resources, the officials said. The dollar recently traded at ¥77.35, after hitting ¥77.44, compared with ¥76.90 late Thursday.
Earlier, the dollar jumped against the yen after a better-than-expected report on September U.S. retail sales. Sales climbed 1.1% last month, topping forecasts for a rise of 0.8% and better than a 0.3% increase in August. Excluding autos, sales also topped expectations, rising 0.6%. Economists had expected sales excluding autos to climb 0.4%.
Meanwhile, the pound was trading at $1.5801 compared with $1.5767, and the dollar bought 0.8937 Swiss franc from 0.8982 franc.
The euro drifted higher during European trading hours as thin dealing conditions helped the single currency regain all the ground it lost during the Asian session. The common currency had come under pressure during Asian hours after Standard & Poor's Corp. downgraded Spain's sovereign-credit rating one notch to double-A-minus and after Fitch Ratings fired a warning shot at European and U.S. banks late Thursday.
But reports that finance officials from the Group of 20 industrialized and developing economies meeting in Paris are considering boosting the International Monetary Fund's lending capacity to help the euro zone allowed traders to shrug off some of these concerns.
That gave the common currency a boost to as high as $1.3828 and to ¥106 in European trading, even as the gap in yields between France's 10-year government debt and that of Germany widened to a euro-era high of 0.91 percentage point. This hints at concerns over France. The cost of insuring European government debt against default also rose slightly.
