The euro touched its strongest level in two weeks versus the dollar after German business confidence unexpectedly increased to a nine-month high, fueling investor appetite for risk.
The 17-nation currency strengthened versus the yen as governments committed more than $430 billion in fresh money to the International Monetary Fund to help it protect the world economy against Europe’s deepening debt crisis. The pound gained for a fifth day against the dollar after U.K. retail sales climbed. Brazil’s real rose for the first time in six days as technical indicators showed it may have fallen too quickly.
“This is a broader sentiment recovery, and the euro is being driven by better-than-expected Ifo readings,” said Ned Rumpeltin, head of Group of 10 currency strategy at Standard Chartered Plc in London, referring to the German confidence gauge. “U.K. retail sales were also quite constructive.”
The euro gained 0.6 percent to $1.3219 at 5 p.m. New York time, for a 1.1 percent weekly advance, the first since March 30. It touched $1.3228, the highest level since April 4. The shared currency rose 0.5 percent to 107.79 yen, appreciating 1.9 percent on the week. The yen was 0.1 percent stronger at 81.52 per dollar, paring its weekly drop to 0.7 percent.
The Munich-based Ifo institute said today its business climate index, based on a survey of 7,000 executives, rose to 109.9 this month from 109.8 in March. Economists in a Bloomberg survey forecast a drop to 109.5.
The near-doubling of the IMF’s firepower was announced after Group of 20 finance ministers and central bankers met today in Washington. While the U.K. and Australia were among those making specific pledges, Brazil said emerging markets would condition their help on getting more power at the fund.
The Dollar Index, which Intercontinental Exchange Inc. uses to track the greenback against the currencies of six major U.S. trade partners, fell 0.5 percent to 79.144 as U.S. stocks snapped a two-day decline amid better-than-estimated earnings reports from Microsoft Corp. and General Electric Co. The Dow Jones Industrial Average advanced 0.5 percent.
Brazil’s real rose versus the dollar, snapping five days of losses as risk appetite increased. The central bank lowered the benchmark rate this week by three-quarters of a percentage point to 9 percent and signaled more cuts may come.
The 14-day relative strength index for the Brazilian currency versus the dollar reached below 30 for a fourth day, the longest stretch since September. The level indicates an asset’s price may have fallen too far, too fast.
The real advanced 0.4 percent to 1.8724 per dollar after touching 1.8935 yesterday, the weakest level since November.
Mexico’s peso also rallied, climbing 0.7 percent to 13.1010 to the greenback, and South Africa’s rand gained 0.5 percent to 7.8123 per dollar.
The yen touched its weakest level since April 10 versus the dollar, 81.78, on speculation the Bank of Japan will add to monetary easing at its next meeting on April 27. Bank Governor Masaaki Shirakawa said in a speech in Washington this week the nation still needs monetary stimulus.
Futures traders trimmed bets the yen will decline against the dollar, Commodity Futures Trading Commission data show. Net-shorts fell to 57,803 in the five days ended April 17, from 66,084 a week earlier
The BOJ set a 1 percent inflation goal on Feb. 14 and increased the size of its program to buy government debt. Deputy Governor Kiyohiko Nishimura said two days ago the central bank is ready to implement additional easing if necessary.
“Political pressure on the BOJ has increased, and that’s why we’re looking for a higher dollar-yen,” Mary Nicola, a currency strategist at BNP Paribas SA in New York, said in a Bloomberg Radio interview on “Bloomberg Surveillance” with Tom Keene. BNP expects Japan’s currency to weaken to 85 by mid-year.
The yen fell against all of its major counterparts today except the Taiwanese dollar and South Korean won. It has tumbled 8.7 percent this year, the worst performer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar has lost 2.6 percent, and the euro has fallen 0.5 percent.
Sterling recorded its biggest weekly gain versus the dollar in 15 months after U.K. retail sales climbed more than forecast in March.
Sales including auto fuel gained 1.8 percent, compared with February, when they declined 0.8 percent, the Office for National Statistics said today in London.
The pound rose 0.4 percent today to $1.6122, for a 1.7 percent gain on the week, the most since January 2011. Its five-day winning streak was also the longest in three months. The U.K. currency added 0.2 percent to 81.97 pence per euro after touching 81.62 pence yesterday, the strongest level since Aug. 26, 2010.