Dollar Near Two-Week Low on Global Economic Recovery Prospects

Dec. 30 (Bloomberg) -- The dollar traded near a two-week low versus the euro on speculation the global recovery is gathering momentum, boosting demand for higher-yielding assets.

The U.S. currency extended losses this year against 12 of its 16 major counterparts after a South Korean report showed industrial production rose for a 17th straight month, adding to signs that Asian economies are picking up. The Australian dollar traded near the highest since 1982 versus the greenback before a U.S. report that's forecast to show initial jobless claims fell.

"There are a lot of real-money managers who are looking to put on long Asian-currencies positions going into 2011," said Kurt Magnus, executive director of foreign-exchange sales at Nomura Holdings Inc. in Sydney. "It's a lot to do with growth. There's a clear move away from the dollar into Asia."

The dollar bought $1.3222 per euro at 8:53 a.m. in Tokyo from $1.3225 in New York yesterday, after reaching $1.3275 on Dec. 28, the lowest level since Dec. 17.

Japan's currency was at 81.65 yen per dollar from 81.62 yesterday, after earlier touching 81.61, matching the strongest since Nov. 10. The yen has risen 13.9 percent this year, the best performance among its major peers versus the dollar. The euro fetched 107.97 yen from 107.94 yen.

Australia's dollar was at $1.0174 from $1.0179 yesterday, when it rose to $1.0184, the highest level since July 1982 before the December 1983 move by the nation to stop pegging the so-called Aussie to a trade-weighted basket of currencies.

The U.S. currency has lost 2.4 percent in 2010, according Bloomberg Correlation-Weighted Indexes. The yen has surged 12.8 percent this year, according to the index, which measures currency performance of 10 major trading partners, and the euro has slumped 10.7 percent in the period.

South Korea's industrial output expanded 10.4 percent in November from a year earlier, statistics Korea said in Gwacheon today. First-time filings for U.S. jobless insurance decreased to 415,000 in the week ended Dec. 25 from 420,000 in the previous week, according to a Bloomberg News survey of economists before the Labor Department report today.

Source: www.sfgate.com