Dollar tumbles to three-year low in London

The dollar hit a three-year low against a basket of currencies on Thursday as strong corporate earnings buoyed risk appetite in illiquid pre-Easter trade, threatening to drive the greenback to historic lows. Ongoing expectations the Federal Reserve will keep US interest rates low battered the dollar to a 16-month low against the euro around $1.4650, while traders said M&A-related demand also pushed the single currency higher.
The Australian dollar soared to a 29-year high while the Canadian currency pushed up to its strongest since late 2007, though traders warned the moves could reverse as investors take profit on short dollar positions before the long Easter weekend. Signs of profit taking abounded in the European session, with the Aussie stumbling ahead of options barriers at $1.0800 after surging as high as $1.0775.
The euro was up 0.6 percent at $1.4605, with traders citing bids from eastern European accounts above $1.46. Stops were tripped on the way up after breaching an option barrier at $1.4550 and the January 2010 high at $1.4583. The dollar index was at 73.874, having slipped to 73.735, the lowest since August 2008 - just before it surged during the Lehman Brothers collapse - as world stocks marched higher.
Broad dollar weakness pushed the Swiss franc to an all-time high, while gold prices also hit their strongest ever. The euro looked poised for further gains, with the path clearing for a run at the 2009 peak at $1.5145. It has vaulted from $1.4155 hit on Monday, and analysts said that few in the market were brave enough to counter insatiable euro demand from Asian sovereigns, which have been seen swooping in to buy the currency whenever it sells off.
Market participants say central banks have recycling dollar proceeds into the euro, Aussie and other currencies. Asian authorities have increasingly had to intervene to buy dollars to limit the gains in their currencies and then shift them into other currencies and assets. The dollar lost 0.6 percent against the yen to 81.95 yen, breaking support with a fall below 82.00.