Euro hit a three month high against the dollar in the Asian trading session, as strong risk sentiment in Asian markets provided support. The European Central Bank’s three-year long-term refinancing operation later today is the main factor driving risk higher, as the availability of limitless cash has staved off a liquidity crisis in the euro-zone banking system, easing concerns of a credit crunch.
EURUSD peaked at 1.3484, to match Friday’s high, which is the highest level since early December last year.
GBPUSD was lifted by risk appetite as well. After opening in Asia at 1.5900, cable climbed to a three-month high of 1.5936.
Dollar was choppy against the yen, ending lower due to month-end dollar-selling from Japanese exporters. USDJPY opened at 80.44 and rose early to 80.68 before falling to 80.24. Euro pretty much followed the same pattern, but a successful LTRO operation later today could bring the euro back up. EURJPY gave back early gains after falling from the session peak of 108.71 to 108.07.
The risk-on mode of the market generally weakened the U.S. dollar. The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 78.118, its lowest level since December 8, from 78.244.
The Australian dollar was lifted by risk appetite as well as after a report showing Australian retail sales advanced by the most in four months. AUDUSD climbed to a three-week high of 1.0821 from 1.0761.
The New Zealand dollar climbed to six-month peaks after being boosted by strong New Zealand building permits and a survey showing a rise in business confidence. NZDUSD rose to 0.8437.