The yen fell to a one-month low against the euro and dropped versus the
dollar as investors added to holdings of higher-yielding assets funded
in Japan's currency.
The yen's decline against the Australian and New Zealand dollars, two
favorites of so-called carry trades, began earlier as Asian stocks
rallied. Australia's dollar traded close to a 25-year high versus its
U.S. counterpart, while the kiwi dollar gained a sixth straight day.
The U.S. dollar extended gains versus the yen and euro as new-home
sales in the U.S. unexpectedly rose in April.
The euro reversed gains versus the dollar after reports showed German
consumer confidence fell more than economists forecast and French
business confidence declined to the weakest in more than two years in
May.
``We see weakness developing in many aspects and that's why we are
seeing a retreat'' from the euro, said Hans-Guenter Redeker, global
head of currency strategy in London at BNP Paribas SA, France's biggest
bank.
Consumer prices in the euro region rose 3.5 percent in May, faster than
the 3.3 percent gain the previous month, according to a Bloomberg News
survey. The statistics office will release the figure on May 30.
The dollar extended gains as new-home sales in the U.S. rose 3.3
percent to an annual pace of 526,000 from a 509,000 rate the prior
month that was the lowest in 17 years, Commerce Department data showed.
A separate report today showed home prices dropped last quarter by the
most in at least 20 years.
Confidence among U.S. consumers fell to the lowest level in more than
15 years. The Conference Board's confidence index declined more than
forecast to 57.2, the lowest level since October 1992, from a revised
62.8 in April, the New York-based research group said.
The dollar has traded between about 102 yen and about 106 yen since
mid-April. The dollar may break out of this range this week as
double-no-touch options expire, said Shinichi Takasaka, manager of
foreign exchange and financial products trading at Mitsubishi UFJ Trust
& Banking Corp. in Tokyo.