Early trade in New York: Dollar falls; euro tops $1.18 after sentiment survey

NEW YORK: The dollar slid from one-week highs and the euro topped $1.18 on Tuesday as investors flocked to currencies that benefit from an improving global market outlook, with the S&P 500 nearing a record high and investor sentiment in Germany rising more than expected.

Aside from the euro, sterling and commodity-linked currencies such as the Australian and Canadian dollars, as well as the Norwegian crown, gained against a broadly weakening dollar. "The greenback remains dogged by the narrative that other nations are better navigating the coronavirus pandemic," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

In late morning trading, the dollar index was down 0.2% at 93.454, sliding from a one-week high hit earlier in the session. The euro rose after the ZEW survey of economic sentiment rose to 71.5 from 59.3 the previous month, far exceeding a forecast for 58.0 in a Reuters poll of economists.

As a result, euro/dollar gained 0.5% to $1.1809. The move was exacerbated by thin August liquidity, said Jane Foley, senior currency analyst at Rabobank, and she was "suspicious" about how much effect the ZEW survey had. The euro was last up 0.3% at $1.1769.

The dollar was last up 0.4% against the Japanese yen at 106.41 yen, as US 10-year Treasury yields rose to four-week highs. The greenback earlier touched a one-week peak versus the yen. Sterling traded up 0.2% at $1.3095 after Bank of England Deputy Governor Dave Ramsden said the central bank will step up quantitative easing if the British economy struggles again.