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The Swiss franc, yen and dollar dropped against most major counterparts as stocks and commodities climbed on speculation the world will avoid a return to recession, reducing demand for a haven.
Currencies of higher-yielding countries strengthened amid rising investor appetite for riskier assets. The franc was the worst performer, falling to a seven-week low versus the euro, after Federal Reserve Chairman Ben S. Bernanke said last week the U.S. economy hasn’t deteriorated enough to warrant immediate additional stimulus.
“Riskier currencies are doing better because the market is buying riskier today,” said Matthew Perrier, Toronto-based director of foreign exchange at Bank of Montreal. “We’re seeing broad-based dollar weakness across the board and strength in commodities and commodity currencies.”
The Standard & Poor’s 500 Index rose 2% percent, and the Thomson Reuters/Jefferies CRB Index of raw materials strengthened 0.5 percent. U.S. stock, bond and commodity markets are open as usual today after Manhattan was spared the worst of Hurricane Irene.
“We’re seeing the U.S. dollar get sold, but also the other safe-haven currencies such as the yen and Swiss franc,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Singapore. “Equity markets around the region are doing pretty well today.”
Bernanke, speaking at an economics conference Aug. 26 in Jackson Hole, Wyoming, sought to reassure investors and the public that U.S. growth is safe in the long run. While he said the Fed still has tools to aid the recovery if needed, he stopped short of indicating that the central bank will move ahead with a third round of government bond-buying.
The greenback remained lower as Commerce Department data showed U.S. consumer spending rose 0.8 percent in July, the biggest gain since February, after a 0.1 percent decline the prior month.
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