The dollar rose to the highest against the euro in almost two years on speculation the U.S. government will increase support for the housing market.
The currency advanced for a seventh day as on bets the European Central Bank will favor interest-rate cuts to support the 15-nation economy. The Wall Street Journal reported the U.S. may spend $40 billion to prevent more home foreclosures, citing a person familiar with the plan. The yen trimmed gains as U.S. stock futures climbed and Asian stocks pared losses.
The greenback advanced against 10 of the 16 most-active currencies as Standard & Poor's 500 Index futures rose 1.5 percent following a 5.9 percent decline yesterday. South Korea's won dropped 3.3 percent to 1,408.90 and Taiwan's dollar slipped 0.9 percent to NT$33.260.
Treasury Secretary Henry Paulson said this week that he aims to intensify efforts to stem foreclosures by using part of the government's $700 billion financial-rescue fund.
The seven-day drop in the common European currency was the longest stretch since Sept. 8. ECB Executive Board member Jose Manuel Gonzalez-Paramo signaled lower borrowing costs. The British pound declined to near a five-year low on speculation U.K. consumer spending shrank and the economy slowed.
The euro declined as ECB's Gonzalez-Paramo told the Irish Independent newspaper in an interview today the bank expects ``inflation to come down more quickly than a month ago as a result of slower growth, lower commodity prices.''
Investors are betting the ECB will lower borrowing costs by another half-percentage point by June after cutting the main refinancing rate by a half point to 3.75 percent on Oct. 8, part of coordinated reductions by major central banks.
EUR/USD it was consolidated within the limits of $1,2720-$ 1,2855.
GBP/USD has become stronger from area of a session low on $1,6155 in area $1,6330.
USD/JPY having established a session low on Y96,83, the pair has receded in area Y98,20.
UK data at 0830GMT sees BBA net mortgage lending and retail sales data for September, which are expected to come in at -0.9% m/m, 1.9% y/y.
At 0900GMT Eurozone August industrial new orders are due to come in at 0.3% m/m, -0.3% y/y.
US data starts at 1230GMT with the weekly jobless claims, which are expected to rise 9,000 to 470,000 in the October 18 employment survey week. There were 458,000 claims in the September 13 employment survey week. That is followed by further US data including the OFHEO Home Price
Index at 1400GMT, the weekly natural gas stocks at 1435GMT and M2 Money Supply at 2030GMT.