The euro advanced for a third straight week against the US dollar in the longest stretch of gains since June after European leaders agreed to a recapitalization of banks and voluntary losses for holders of Greek debt.
The US dollar was headed for a drop against all of its major counterparts last month, as speculation the US Federal Reserve may embark on a third round of asset purchases spurred risk appetite before the US central bank meets next week. The yen reached a record high against the greenback in three consecutive sessions this week on bets the Bank of Japan will fail to stem the currency’s gains.
“It’s nice to see a group of officials actually act like adults and get something done in a welcome surprise to the market,” said Greg Salvaggio, senior vice president of capital markets at the currency-trading firm Tempus Consulting Inc in Washington, referring to the European accord. “The euro went higher. We now have to start focusing on if it has really been contained. It’s still a very, very thick animal over there.”
The euro rose 1.8 percent to US$1.4147 this week, trading higher than US$1.40 for the first time since last month. The yen appreciated 0.6 percent to ¥75.82 per US dollar and touched the post-World War II high of ¥75.66 on Thursday after also setting records on the two previous days. The euro increased 1.2 percent to ¥107.28.
Hedge funds and other large speculators this week reduced bets that the US dollar would gain against major counterparts, the US Commodity Futures Trading Commission reported on Friday. Net bets the greenback will rise against the yen, euro, Australian dollar, Swiss franc, Canadian dollar, pound, Mexican peso and New Zealand dollar dropped to 86,271 contracts for the week ended Tuesday from 126,628.
Canada’s dollar had the fourth-smallest gain versus the greenback among major currencies after the Bank of Canada cut its growth outlook.
The loonie, as the currency is also known, climbed 1.5 percent to C$0.9917 per US dollar, trailing all of its major counterparts except the New Taiwan dollar, yen and pound. It advanced to a level stronger than parity versus the greenback for the first in time in a month.
The euro rose 2 percent against the greenback on Thursday, the most since July last year, after EU leaders agreed to increase the region’s rescue fund capacity to 1 trillion euros (US$1.4 trillion).
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