Source: Reuters
The dollar gave up most early gains against the yen on Friday, heading towards 15-year lows and keeping prospects for yen intervention alive, while the Swiss franc stumbled as investors sold safe-haven currencies.
News that Dubai World had reached a deal to restructure liabilities helped ease recently renewed fears about Dubai's debt woes and boosted risk demand. That pushed the euro up 1 percent on the day versus the Swiss franc, while a rise in Chinese imports boosted commodity currencies including the Australian dollar.
The dollar Index fell 0.2 percent against a basket of currencies , having failed to hold above the index's 55-day moving average at 82.80. Against the yen, the dollar was off its session highs of 84.28 yen , falling to 83.90 yen, as Japanese Prime Minister Naoto Kan reiterated that Japanese authorities would take decisive steps on the yen if needed. Joint intervention in currency markets, however, would be difficult, he said.
The dollar rose earlier in the session, helped by an increase in U.S. Treasury yields on Thursday on U.S. jobs data.
"There has been a moderate improvement in risk appetite which is seeing the dollar fall," said Daragh Maher, deputy head of global foreign exchange research at Credit Agricole CIB. "But it is still very quiet there and it's unlikely to lead to any trend."
Euro goes up after gains against Swiss franc
Currency markets shrugged off worries about European banks and news of a possible 9 billion euro capital raising by Deutsche Bank, which pressured global stock markets ahead of a meeting to finalise European capital rules at the weekend.
The euro was up 0.25 percent at $1.2727 , helped mostly by its gains against the Swiss franc.
It hit the day's high of 1.3050 Swiss francs as the Swiss currency came under broad selling pressure due to the rise in risk appetite.
Traders cited Swiss banks selling the safe-haven franc against the euro, dollar and other currencies. The dollar rose nearly 1 percent on the day to 1.0249 francs .
But strategists remained sceptical about the euro's gains, given the euro zone periphery's debt worries and renewed concern this week about the region's banking sector.
"It is a risk-on environment which is helping the euro, but clearly structural problems remain given widening spreads and well known problems about its banking sector," said Simon Derrick, head of currency research at Bank of New York Mellon.
His bank's data showed demand was not recovering for assets in peripheral euro zone markets like Greece, Italy and Portugal.
The Swedish crown rallied to a three-year high of 9.2025 crowns per euro after a strong reading of Swedish industrial production data on Friday added to the market's view the economy is recovering faster than other countries.