The dollar fell the
most in almost two months against the euro as the price of oil rose above $129 for the
first time and speculation increased that the European Central Bank will keep
interest rates high.
The euro gained after an adviser to the German
government said European policy makers may raise borrowing costs as soon as the
financial crisis ends.
The Producer Price
Index gained 0.2%
in April, short of economists' expectations and following a rise of 1.1% in the
previous month. But prices excluding food and energy costs rose 0.4%, twice
what was expected.
The euro gained after a government report showed
German producer-price inflation, an early indicator of price pressures in the
economy, accelerated to the fastest pace in almost two years in April on energy
costs.
The single currency
briefly pared gains
after an industry report showed investor confidence in Germany unexpectedly fell. The ZEW Center
for European Economic Research said its index of investor and analyst
expectations declined to minus 41.4, from minus 40.7 in April. Economists
expected a gain to minus 37, according to a survey.
The Japanese currency
held gains earlier
after the Bank of Japan kept its benchmark interest rate at 0.5%. Governor
Masaaki Shirakawa told a press conference inflation risks are rising globally.