Yen broadly lower as investors seek riskier assets
The dollar lost ground versus most major counterparts other than the Japanese yen, knocked down by hopes the global downturn may be bottoming out and by a renewed focus on homegrown problems for the U.S. economy, strategists said.
The dollar rose versus a broadly lower Japanese currency, however, pushing above 101 yen for the first time since October.
Asian equities rose overnight, with Europe following suit. See Asia markets. Read Europe Markets.
U.S. stock index futures were up, pointing to a higher open for Wall Street. See Indications.
The dollar and the Japanese yen have tended to benefit from worries about the world economy and periods of rising financial turmoil as investors flee assets perceived to be more risky. On the flip side, the dollar and yen have tended to weaken amid improved sentiment and rising equity markets.
"The global recession and de-leveraging are still providing fundamental support for the U.S. dollar. However, we expect global growth expectations are about to bottom out, which will increase the focus on deteriorating U.S. fundamentals," wrote strategists at Standard Chartered Bank in a research note.
The improvement in investor sentiment, meanwhile, kept pressure on the yen, while boosting high-yielding and emerging-market currencies, including the New Zealand dollar and the Hungarian forint, said economists at Lloyds TSB.
The dollar traded recently at 101.24 yen, after hitting a high of 101.43 yen earlier Monday morning. The dollar traded around 100.29 yen late Friday.
The dollar and other currencies may continue to find support versus the yen on ideas the Bank of Japan could announce further purchases of corporate assets, as well as Japanese government bonds, when it concludes its two-day policy meeting Tuesday, said analysts at Commerzbank in Frankfurt. See full story.
The dollar fell 1.4% to change hands at 1.6818 New Zealand dollars, and dropped 0.9% versus the Hungarian forint to trade at 217.29 per dollar.
The dollar index , which measures the greenback against a trade-weighted basket of six major currencies, traded at 84.114, down from 84.176 in North American trade late Friday.
The euro was up slightly versus the dollar to trade at $1.3508, compared to $1.3483 late Friday.
February retail-sales data for the 16-nation euro zone underlined worries about the area's own economic outlook.
February sales volume declined 0.6% from the previous month, the statistics agency Eurostat reported. The decline slightly exceeded the consensus forecast for a 0.4% fall. Compared to the same month last year, sales were off by a record 4%.
Meanwhile, inflationary pressures continue to fade, giving the European Central Bank room to further cut interest rates, analysts said. Eurostat said producer prices fell 0.5% in February, for a 1.8% drop compared to February 2008. The decline was the biggest annual fall on record.
The British pound rose to $1.4899 versus the dollar, its highest level since early February and up from $1.4831 late Friday.
The Bank of England's rate-setting Monetary Policy Committee meets Thursday. With official interest rates already at 0.5% and the central bank already engaged in a program of quantitative easing, the MPC is unlikely to announce any changes, the Lloyds economists said.
Trades will likely have to wait until the release of the minutes of the meeting April 22 for any assessment by the MPC of the bank's asset-purchase program, they said.
