Dollar floats above 15-year low against Japanese yen, weakest point this year vs franc

Dollar just above 15-year low vs Japanese yen

NEW YORK — The dollar fell against the euro and most other currencies after a relatively successful bond auction in Europe helped investors shrug off some concerns about the stability of the European banking sector.

Meanwhile, the dollar remained near a 15-year low versus the Japanese yen and its weakest point in 2010 against the Swiss franc.

The auction, in Portugal, one of Europe’s weaker economies, seemed to trigger investors’ taste for riskier bets such as the euro and stocks.

The euro rose to $1.2724 from $1.2702 late Tuesday, but was trading below its close on Monday. It plunged Tuesday after a report in The Wall Street Journal said the EU’s stress tests into 91 banks in July understated some lenders’ holdings of potentially risky government debt, sparking a sell-off in stocks.

On Wednesday, the Portuguese government managed to raise 1.04 billion euros ($1.3 billion) in a bond auction Wednesday that drew strong investor interest, helping assuage concerns that the indebted country could default. Traders turned to riskier bets such as stocks and countries with higher interest rates than that of the U.S.

Worries about countries such as Greece defaulting on their debts and the repercussions for the European banking sector helped drag the euro to a four-year low against the dollar earlier this year and weighed on stock markets worldwide.

But the euro’s bounce may be short, said Brian Dolan, chief currency strategist at Forex.com. There were “definitely still a lot of concerns out there just bubbling under the surface,” he said. “The euro is not out of the woods yet.”

The British pound also rose to $1.5480 from $1.5344, while the dollar slid to 1.0365 Canadian dollars from 1.0473 Canadian dollars after the Bank of Canada boosted the country’s interest rate by a quarter point to 1 percent. Its the third consecutive time the central bank has raised the country’s borrowing rate, making assets priced in Canadian dollars more lucrative for investors.

The renewed appetite for riskier bets after Portugal’s bond auction helped the dollar recover slightly from a 15-year low against the yen and its lowest point in 2010 versus the Swiss franc struck in overnight trading.

The yen and Swiss franc have been favored bets for investors seeking safety this summer, while the dollar’s appeal as a safe haven has faded somewhat as data suggests economic growth in the U.S. is slowing significantly.

The dollar dropped to a fresh 15-year low of 83.35 early Wednesday before recovering to 83.98 yen in late afternoon trading, up from 83.79 late Tuesday. Last month, the dollar went below 84 yen for the first time since June 1995.

A Japanese official said the country could act to limit the yen’s rise. Japan hasn’t intervened in the currency market since 2004, but a rising yen is eating into the profits of its big exporters, potentially undermining the country’s recovery.

In late trading, the U.S. currency also recovered to 1.0118 Swiss francs from 1.0096 Swiss francs Tuesday. Earlier on Wednesday, the dollar dipped as low as 1.0063 francs, its weakest level this year.

The also euro hit a record low versus Switzerland’s currency early Wednesday.