The dollar and the yen rose for a second day against the euro on concern the U.S. government's bank-rescue plan will fail to revive lending, boosting demand for the two currencies as a haven, Bloomberg reported.
The yen also gained against higher-yielding currencies such as South Korea's won and Sweden's krona and the cost of protecting Asia-Pacific bonds from default rose after Treasury Secretary Timothy Geithner failed to provide details on how he will help banks cope with toxic assets. The euro weakened before a report tomorrow that may show European industrial production dropped the most in almost 23 years.
"The plan is not the quick fix investors were hoping for, so there's obvious disappointment," said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. "Risk aversion will probably spur them to seek the relative safety of the dollar and the yen in the near term."
The dollar strengthened to $1.2890 per euro as of 1:05 p.m. in Singapore, after gaining 0.7 percent yesterday. The yen climbed to 116.51 per euro after appreciating 1.8 percent yesterday, the first advance in four days. Japan's currency traded at 90.38 per dollar from 90.47.
Trading may be subdued today because of a public holiday in Japan, Hampton said.
The yen advanced 0.5 percent to 15.36721 against the won and 0.5 percent to 10.909 versus the krona. The Markit iTraxx Australia index was quoted five basis points higher at 330 basis points, according to Westpac Banking Corp. The benchmark is tied to the debt of 25 companies, including Qantas Airways Ltd. and BHP Billiton Ltd.
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