The dollar fell against most major counterparts as signs the global recovery is gathering momentum spurred demand for higher-yielding assets. The Australian dollar climbed to the strongest since it was freely floated ahead of data today forecast to show U.S. initial jobless claims declined and Italian business confidence rose to the highest level in more than two years. South Korea’s won gained the most in two months after the central bank forecast the nation’s current-account surplus will widen this month. The yen reached a seven-week high versus the dollar on speculation that China will allow the yuan to appreciate at a faster pace. “Market consensus is the global economy will continue to expand, with the U.S. seeing a recovery and emerging economies continuously growing,” said Takeru Ogihara, chief strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s second- largest bank. “That’s a factor to buy growth-related currencies” against the dollar, he said. The dollar declined to $1.3244 per euro at 6:48 a.m. in London from $1.3225 in New York yesterday. The U.S. currency weakened to 0.9428 Swiss francs from 0.9456 francs, after touching a record low of 0.9417 francs. Japan’s currency rose to 81.43 yen per dollar from 81.62 yesterday. It earlier touched 81.29, the strongest since Nov. 9. The yen and Australian dollar have risen more than 13 percent against the dollar this year, the most amongst major currencies. The euro was at 107.84 yen from 107.94 yen, after reaching 107.61 yen, the weakest since Sept. 14. Australia’s dollar was at $1.0174 from $1.0179 yesterday. It earlier touched $1.0198, 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. U.S., Italian Data 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 data. The Isae institute’s index of Italy’s manufacturing-sentiment climbed to 102.00, the highest since March 2008, from 101.6 in November, another survey showed. South Korea’s industrial output expanded 10.4 percent in November from a year earlier, Statistics Korea said in Gwacheon today. The International Monetary Fund predicted in October that world gross domestic product may expand 4.2 percent in 2011, compared with a 4.8 percent in 2010. “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.” Dollar Index The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, slipped 0.2 percent to 79.644. South Korea’s currency rose for a fourth day after Bank of Korea official Lee Young Bog forecast his nation’s current- account surplus will widen in December, reaching some $29 billion for the year. Speculation that exporters are repatriating overseas earnings also supported the won in local financial markets’ final trading session of the year, according to Yun Se Min, a currency trader at Busan Bank in Seoul. “The fundamentals support a stronger won going ahead,” Yun said. “The market will also be focusing on exporter orders, which pick up a lot towards the end of the year.” The won rose 1 percent, the most since Oct. 13, to 1,134.85 per dollar. China’s Yuan Japan’s currency gained for a ninth day versus the dollar, its longest winning streak since October 2004, after the People’s Bank of China set the reference rate for the yuan stronger for an eighth day. Small and gradual appreciation of the yuan has helped more than it’s hurt China’s economy, Sheng Shongcheng, head of the central bank’s statistics and analysis department, said in a speech published today by the Financial News newspaper. “China appears to be letting its currency strengthen to fight inflation,” said Marito Ueda, senior managing director at FX Prime Corp. a foreign-exchange margin company in Tokyo. “The bias is for the yen to appreciate.” The PBOC set its daily reference rate at 6.6229 per dollar, compared with 6.6247 yesterday. The yuan is allowed to trade by up to 0.5 percent either side of the so-called central parity rate. The value of Japanese exports to China, Japan’s biggest market, advanced 18.3 percent in November from a year earlier, compared with a 17.6 percent increase in October, the Ministry of Finance Ministry in Tokyo reported said last week. To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

Source