World Forex

TOKYO (Dow Jones)–The U.S. dollar declined in Asia Wednesday, hitting a seven-month low against the British pound and an eight-month low versus the Australian dollar, as gains in regional stocks helped lift investor demand for riskier currencies.
Sterling touched $1.6658 during the session, the highest in seven months. The Australian dollar, partly helped by the country’s surprisingly strong gross domestic product data, reached $0.8265 - a level unseen since September 29.
The euro also gained versus the U.S. currency.
“With recent stock-market rises as well as signs that the (global) economy is bottoming out, players feel like taking risks,” said Yuji Kameoka, currency analyst at Daiwa Institute of Research.
In early Asian hours, higher Asian shares encouraged short-term players in the region to buy riskier, higher-yielding currencies against the low-yielding U.S. and Japanese units, dealers said. Japan’s benchmark Nikkei 225 Stock Average index was up 0.5% at 9754.86 as of 0400 GMT.
Along with the sterling, the euro rose $1.4326 from New York late Tuesday to $1.4330. Traders say it could reach $1.4500 in the near term.
The U.S. dollar, which is seen as a safe-harbor currency during financial storms, took a beating as investor confidence improved. The Dollar Index - which measures the value of the US dollar against six other currencies, including the euro - fell to near a six-month low of 78.34 from Tuesday’s level of 79.16.
Weighing on the greenback were not only rises in Asian shares but also Australia’s first-quarter GDP, which rose 0.4% from the previous three months, beating market expectations for a 0.1% gain.
But the U.S. currency gained against the yen, which traders consider to be even safer than the greenback.
Next on players’ agenda is the European Central Bank’s planned policy meeting on Thursday. However any impact will probably be muted if the outcome of the meeting is in line with market expectations, dealers said.
The markets anticipate that the ECB will keep its interest rate unchanged, but will release details of its plan to purchase around EUR60 billion in covered bonds.