Dollar, euro rise against 'safe' yen

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By AFP

The dollar and the euro climbed against the safe-haven yen on Monday as hopes grew that the world economy was heading towards a recovery following positive US data, dealers said.

In late morning trade here, the euro rose to 135.49 yen from 135.21 yen in New York late on Friday. Against the dollar, the euro fell to 1.4299 dollars from 1.4328.

The dollar climbed to 94.79 yen from 94.35 yen late on Friday.

The Japanese currency, seen as a safe bet during the economic crisis, was sold off as investor risk appetite improved, dealers said.

Comments by Federal Reserve chairman Ben Bernanke and US housing data issued last Friday added to optimism that the global recession was easing.

"Fed Chairman Bernanke's speech on Friday... remains the key near-term driver of currency markets," said Lee Hardman, economist at the Bank of Tokyo-Mitsubishi UFJ in London.

"The market has taken heart from the cautiously optimistic tone of speech which combined with the much stronger than expected US existing home sales report has helped reinvigorate risk sentiment."

Hardman added: "The yen has been the clear underperformer amongst safe-havens, in contrast to the dollar which notably has held its ground against the major currencies."

Markets were anticipating more positive US economic figures this week after a surprisingly strong jump in US existing-home sales, to a two-year high, continued to lift global equity markets on Monday.

Traders also reacted positively to Bernanke's comment that the prospects for a global economic recovery "appear good", and to a eurozone purchasing managers' index published Friday that rose to a 15-month high in August.

"Optimistic comments from the Fed and better-than-expected existing home sales reassured the foreign exchange market," Tokyo Forex & Ueda Harlow foreign exchange manager Masanobu Ishikawa told Dow Jones Newswires.

In London on Monday, the euro was changing hands at 1.4299 dollars against 1.4328 dollars late on Friday, at 135.49 yen (135.21), 0.8676 pounds (0.8681) and 1.5176 Swiss francs (1.5159).

The dollar stood at 94.79 yen (94.35) and 1.0618 Swiss francs (1.0575).

The pound was at 1.6474 dollars (1.6501).

On the London Bullion Market, the price of gold gained to 953.85 dollars an ounce from 952.50 dollars an ounce late on Friday.

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