Dollar struggles in Asia

The dollar hovered near a 15-month low against a basket of currencies and was in sight of a 29-year trough against the Australian dollar as a bounce in equities suggested that risk appetites were on the mend. The euro dipped to a session low $1.4150 after Standard & Poor's downgraded Portugal's credit ratings and warned it could cut it again, but it quickly recovered as further losses were clipped by bids seen around $1.4140.
Analysts said the broader picture was one of dollar weakness on the back of a recovery in global equities and improving risk sentiment, while the euro had become somewhat resilient to ratings downgrades given that much of the eurozone's fiscal woes has been priced into its value.
"The market is treating many of these downgrades as rear-guard action which is already well discounted and the dollar is under pressure broadly," said Todd Elmer, currency strategist at Citi in Singapore. In late Asian trade, the euro traded around $1.4180, up slightly from late US trade.
The single currency has rebounded after sliding to around $1.4050 on Thursday. Traders suspected Asian sovereign names had been buying the euro around that level. The buying put back into view a 4 1/2-month high of $1.4249 hit earlier in the week, and analysts including Elmer at Citi expected the euro to soon retest that level, and subsequently $1.4283, a peak in early November. The dollar held steady against the yen at 80.99 yen, staying some ways above a record low of 76.25 yen hit last week.
Traders in Hong Kong cited slight dollar demand at 80.90 and 81.00 yen, while adding that selling demand was limited in Asian trade. A trader for a major Japanese bank in Tokyo said there were dollar offers at levels above 81.50 yen.