LONDON: The yen dropped towards its 2019 low on Monday and the Swiss franc reached its weakest in nearly a month as a rally in global markets cut into demand for currencies considered safe havens.
Market volatility has eased in recent weeks and moves were again muted, though optimism over U.S.-China trade negotiations and strong Chinese economic data seemed to be pushing investors into riskier currencies.
The yen fell as low as 112.09 per dollar in Asian trading, near a 2019 low of 112.135, before recovering slightly.
"USD/JPY is testing the 112.00 level and we expect the cross to break above this level this week in response to solid US data and stabilising risk appetite," ING analysts said in a note.
The Swiss franc also eased against the euro, to 1.1340 francs. It has dropped 1.5 percent from its 2019 high of 1.1164 francs in late March.
An upbeat assessment of the global economy from an International Monetary Fund meeting last week has helped global investment sentiment.
The optimism was bolstered by U.S. Treasury Secretary Steven Mnuchin, who said he hoped U.S.-China trade talks were approaching a final lap.
Data out of the world's biggest economies also signalled a recovery. On Friday, China reported exports rebounded and new bank loans increased more than expected in March.
The dollar index slid 0.2 percent to 96.829, while the euro rose 0.1 percent to $1.1315.
Although the dollar tends to underperform when risk appetite grows, data on Friday showed speculators bolstered their net long dollar position in the latest week. It's now at its highest since December 2015, while traders remain short the euro.
Encouraging flash purchasing managers' index surveys in the euro zone on Thursday could squeeze euro shorts and push the single currency higher, Societe Generale analyst Kit Juckes said.
"If that helps drag the Bund yield a bit higher, the euro will surely follow it, as it has done for the last year," he said.
Euro/dollar has been stuck in a tight range in 2019 as a dovish shift in the Federal Reserve's monetary policy outlook was offset by the European Central Bank's similar stance.
Sterling rose to $1.31, bobbing around the same levels it has for much of the past week. Volatility has fallen since the European Union and British government last week delayed Brexit until October.
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