The dollar posted its biggest weekly gain versus the euro in more than two months on optimism that the worst of the financial crisis in the US is over.
The Dollar Index, which tracks the greenback against the currencies of six of its biggest trading partners, completed the largest weekly advance since November after Wells Fargo’s profit beat estimates, triggering the steepest one-day gain on record in the Standard & Poor’s 500 Banks Index.
The euro dropped the most against the yen since January on concern that the European Central Bank will cut its benchmark interest rate to below 1 per cent to spur growth.
“Wells Fargo’s results augur well for US banks’ earnings and point to an easing in the financial crisis,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow, Japan’s largest currency broker. “The dollar is likely to be bought.”
The dollar climbed 2.3 per cent this week to $1.3143 per euro on April 10, the biggest gain since the five days through January 23. It touched $1.3090 yesterday, the strongest level since March 18. The greenback strengthened 1.1 per cent to $1.4672 per pound and advanced 0.6 per cent to 1,333 South Korean won.
The yen appreciated 2.3 per cent to 132.18 per euro, the biggest gain since the week to January 23. It was little changed against the dollar at 100.24 yen from 100.31 on April 3.
The Dollar Index, which the ICE uses to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, gained 1.9 per cent this week to 85.786.