Euro rises versus dollar in London

The euro edged up to a two-week high against the dollar on Friday on year-end buying by central banks, while the Swiss franc hovered near a record high against the US currency in thin trade. The dollar was under pressure, hovering near a seven-week low against the yen while commodity currencies such as the Australian dollar remained in favour on expectations that Asia will lead a robust global recovery in 2011.
The euro was up 0.75 percent at $1.3380, holding just above its 100-day moving average of $1.3370 and having hit a two-week high of $1.3391 on trading platform EBS. Traders cited buying by Asian central banks and real money accounts that led to stops being triggered. Option barriers are reported at $1.3400, with stops said to be lined up at $1.3405.
The dollar set an all-time low against the Swiss franc of 0.9339 francs on trading platform EBS. It pared its losses to stand at 0.9355, flat for the day. The euro was up 0.7 percent at 1.2515 Swiss francs, recovering from Thursday's record low of 1.2398 francs.
For the year the euro has shed over 15 percent against the franc as eurozone peripheral debt problems prompted many investors to seek the relative safety of the Swiss currency. The euro has lost nearly 7 percent versus the dollar and over 18 percent against the yen in 2010. It is likely to stay under pressure as an estimated 150 to 200 billion euros in eurozone sovereign bonds hits the market in the next two months.
Despite the eurozone's troubles, the dollar's inability to gain much boded ill, traders said. The dollar was down 0.3 percent against the yen at 81.30 yen, not far from a seven-week low of 81.28 yen hit on Thursday. It is only about two yen away from a post-World War Two record low of 79.75 set in 1995.
It has shed over 12 percent against the yen this year and whether it starts clawing back those losses in 2011 will depend largely on how durable the US recovery proves to be - with the jury still out given a recent mixed run of data.
Next week, US non-farm payrolls numbers will give insight on the labour market while traders will await Federal Reserve Chairman Ben Bernanke's testimony to the Senate budget panel. Bernanke has sounded extremely cautious about the economy's prospects but that was before a new tax cut plan was unveiled that is expected to boost demand and growth.
Meanwhile, investors stayed in the hunt for growth-linked currencies. The Aussie was flat at $1.0170 and not far from a 28-year peak of $1.0198 set on Thursday. The Aussie has rallied 13 percent against the dollar this year and is up a whopping 22 percent against the euro, making it one of the best performing currencies of 2010.