The dollar stumbled in trading yesterday with investors buying into riskier assets as equities rallied

The single currency rose sharply against the dollar yesterday, gaining over one and a half cents in the wake of positive German data to close marginally below 1.50.

  • Demand for the safe-haven US currency was muted as equity markets rallied strongly, with analysts noting that investor optimism continued to be supported by last week’s pledge from the Federal Reserve to keep interest rates at ultra-low levels for an extended period.
  • In addition, the failure of the G20 leaders to discuss currencies in their meeting over the weekend implied a continued comfort among authorities with the dollar’s recent depreciation.
  • The euro was able to once again breach the $1.50 level for the first time in two weeks, after figures showed a larger than expected 2.7% rise in German industrial, exceeding market forecasts of a 1.2%.
  • Data also revealed stronger exports in Germany, which undermined calls that current euro value is burdening economic recovery.
  • The greenback has pared losses in trading this morning as short-term players move to close out accumulated short positions on the dollar as they prepare for a public holiday in the US.