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The dollar advanced to a two-week high against the yen on speculation the Federal Reserve may consider ending its $600 billion program of government debt purchases earlier than planned.
“The rally in dollar-yen has to do with the market starting to take the hint that policy in the U.S. might be tightened earlier than we thought,” said Adam Cole, global head of foreign-exchange strategy at Royal Bank of Canada in London. “Risky assets generally are performing, and safe-haven assets are underperforming.”
The euro slipped against the dollar as the European Central Bank Executive Board member Lorenzo Bini Smaghi said the risk of the region’s sovereign-debt crisis spreading to other European Union or euro-area nations is “not insignificant.”
Speculation that Portugal may follow Greece and Ireland in accepting financial aid intensified yesterday after S&P cut Portugal’s credit rating to BBB-, saying the nation’s “considerable external financing needs” mean a financial rescue is likely.
The Swiss franc dropped against most of its major counterparts as evidence the global economic recovery is strengthening sapped demand for a refuge. Australia’s currency rose to a record versus the greenback on bets demand for the nation’s commodities will rise. The dollar gained after St. Louis Fed President James Bullard said yesterday the central bank may “reverse” current policy.
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