The euro rose against the dollar, the yen and the Swiss franc on Tuesday after upbeat eurozone and US economic data boosted risk appetite, but its gains were hampered by nagging doubts over euro zone bond issuance. The Australian dollar fell as severe floods in north-east Australia were expected to impact coal production, a major contributor to its economy.
The single currency was helped against the dollar by steady buying from Asian central banks after the euro area purchasing managers' index (PMI) was revised upwards on Monday from the earlier flash estimate, indicating a pick up in the region's growth momentum.
Comments from a Chinese official, who said on Monday the country would continue buying Spanish debt. also helped support the euro. The single currency was up 0.4 percent from late US trading on Monday at $1.3404, but traders reported strong offers from macro accounts and analysts remained sceptical about its ability to rally further.
In the next two months an estimated 150-200 billion euros of government bonds are scheduled be issued by eurozone countries, some of whom are struggling with rising budget deficits and higher borrowing costs. Data on Monday showed US manufacturing grew at its fastest clip in seven months in December and construction spending hit a five-month high in November, helping to fuel a rise in global equity markets.
The dollar rose 0.6 percent to 82.18 yen with traders seeing offers around 82.50 and near-term resistance at the 55-day moving average of 82.60. The euro rose nearly 1 percent to trade above 110 yen. The Australian dollar fell more than 1 percent to $1.0055, retreating from a 28-year peak around $1.0257 set on Friday. Massive flooding in north-east Australia fuelled worries over coal production. Traders said funds sold Aussie for euros, taking profit on long Aussie positions taken in the run-up to the end of 2010.
Against the Swiss franc, the dollar rose 1.2 percent to 0.9452, off an all-time low just above 0.9300 set on Friday. The euro was up 1.4 percent against the franc, pulling back from last week's record low of 1.2398 francs as investors reversed some long Swiss franc positions built in December. Sterling also gained broadly as data showed UK manufacturing activity grew robustly. The pound rose as far as $1.5646, up more than 1 percent on the day.