The dollar fell sharply on Wednesday as a move by major central banks to cut the cost of much-needed liquidity for the global financial system and upbeat US economic data drove investors to currencies with higher returns. The announcement by central banks of developed economies that they were acting to prevent a credit crunch fuelled the market's appetite for risk, lifting currencies such as the Australian, New Zealand and Canadian dollars and the euro.
In midday New York trading, the dollar index was down 0.9 percent on the day to 78.266 after dropping to a nearly two-week low of 77.923. The euro jumped around 2 cents to a session high of $1.35337 and last traded at $1.34614, up 1.0 percent, on pace for its best one-day rise since late October. On the month, however, the euro was down 2.8 percent.