Euro shrugs off Portugal worries; Aussie shines

The euro shrugged off concerns about a debt crisis in Portugal on Friday, supported by steady buying by Asian central banks, while the Australian dollar hovered near a 29-year peak versus the US dollar.
Solid support for the euro was seen around $1.4140, helping it recover from losses after Standard & Poor's downgraded Portugal's credit ratings and warned it could cut it again, with analysts saying Portugal's troubles had mostly been priced in.
The euro was also helped by a survey of German business sentiment which was not as weak as expected. Any gains were expected to be limited, however, keeping the euro below a barrier at $1.4250, which traders said was being strongly defended. But technical analysts said a weekly close above $1.4200 would leave it well positioned for a further rise.
The euro was flat at $1.4170, rebounding from lows on buying by Asian sovereign names. The euro could target a 4 1/2-month high of $1.4249 hit earlier in the week, and beyond that $1.4283, a peak in early November.
The higher-yielding Aussie flew to a 2011 high of $1.0255, just shy of its 29-year peak of $1.0257. Traders cited stops above $1.0260, with option expires at $1.0200. Traders said model funds were adding to long positions in the currency as were real money accounts.
The dollar index, which measures the dollar's value against a currency basket, was up 0.1 percent at 75.836, not far above 75.340 hit earlier this week, its lowest since December 2009. The dollar rose against the yen on reported demand from macro funds with one trader also citing buying by Japanese investors that helped the pair break through stops at 81.10 yen. The dollar was up 0.3 percent at 81.24 yen, but any rise is expected to be capped by reported offers at 81.30-45 yen, with resistance also coming from the 21-day moving average at 81.39 yen. That was well above a record low of 76.25 yen hit last week. Joint intervention by the Group of Seven industrialised nations to sell the yen to contain its surge versus the dollar and other currencies has stabilised the FX market.