By Anchalee Worrachate and Yasuhiko Seki Feb. 16 (Bloomberg) -- The dollar fell against the Australian and New Zealand currencies as stocks gained on improved corporate earnings and commodities advanced, encouraging demand for higher-yielding assets. The euro rose for the first time in five days versus the dollar on speculation the 16-nation currency’s recent losses on Greece’s budget turmoil were too rapid to sustain. Australia’s dollar got a boost as the Reserve Bank said in minutes of its Feb. 2 meeting that further increases in its benchmark cash rate target were likely if the economy extends its recovery. “The market seems to be driven by improved risk appetite,” said Henrik Gullberg, a currency strategist at Deutsche Bank AG in London. “The euro also gained some ground as some signs emerged that policy makers are warming up to the idea of providing some help to Greece. The market might have gone too far in terms of risk aversion recently.” The dollar fell 0.4 percent to $1.3653 against the euro at 7:19 a.m. in New York, from $1.3598 yesterday. The dollar slid 0.7 percent to 89.42 U.S. cents against the Australian currency, from 88.84 cents. The greenback depreciated 0.9 percent to 70.30 versus the New Zealand dollar, from 69.65. The dollar traded at 89.85 yen, compared with 90.02. The MSCI World Index of global equities rose 0.5 percent as the Australian lender Westpac Banking Corp.’s profit climbed and OneSteel Ltd. said demand is rising. Crude oil for March delivery rose as much as 2 percent to $75.58 a barrel. Benchmark interest rates are 3.75 percent in Australia and 2.5 percent in New Zealand, attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits. RBA Minutes The Australian dollar reached the highest level this month against the greenback as the central bank’s minutes said the decision to keep interest rates unchanged this month was “finely balanced” amid concern European sovereign risk may slow the global recovery. The Reserve Bank of Australia will increase its target rate by 1 percentage point this year, according to a Bloomberg News survey. RBA Governor Glenn Stevens increased borrowing costs three times last year, boosting the cash rate target by 0.75 percentage point from 3 percent at the start of October. The Australian dollar will rise to 91 U.S. cents by the end of March, according to the median forecast of 32 analysts in a Bloomberg survey. The euro remained higher after a survey showed German investor confidence decreased in February less than forecast. German Sentiment The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict developments six months ahead, slipped to 45.1 this month from 47.2 in January. The median forecast of 38 economists in a Bloomberg News survey was for a decrease to 41. The euro’s 14-day relative strength index was below 30 yesterday, a sign the currency may be poised to rebound. The euro advanced today against 9 of its 16 major counterparts tracked by Bloomberg. “The euro has been sold quite a lot, so short-term players may want to unwind some huge short positions,” said Tomohiro Nishida, a foreign-currency dealer at Chuo Mitsui Trust & Banking Co. “This may cause a brief rebound.” A short position is a bet that an asset’s price will decline. European finance ministers turned up the pressure on Greece to put its public finances in order and refused to say how they would make good on a promise to rescue the nation if it can’t contain its debt. ‘Concrete’ Measures “We certainly won’t let them off the hook,” Austrian Finance Minister Josef Proell said today before a meeting of European Union finance ministers in Brussels. Sweden’s Anders Borg called for Greece to take more “concrete steps to regain credibility in the markets.” The euro has fallen 1.5 percent against the dollar in February on speculation sovereign debt problems will hamper a recovery in the euro region. The pound rose to 0.2 percent to $1.5693 as a report showed consumer prices rose 3.5 percent in January from a year earlier, the fastest pace in 14 months. A reading deviating more than a percentage point from the Bank of England’s 2 percent target requires Governor Mervyn King to write to Chancellor of the Exchequer Alistair Darling setting out his plans to return to the goal. To contact the reporters on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net; Yasuhiko Seki in Tokyo at yseki5@bloomberg.net

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