Dollar dips versus euro

The yen fell to a lifetime low against the euro on Monday and hit a four-and-a-half-year trough against the dollar on a growing view that Japanese interest-rate rises will be outpaced by other central banks.
But the dollar edged lower against the euro and sterling, tracking a slide in US government bond yields, which retreated after a rise to five-year highs last week.
The yen has declined across the board since Bank of Japan governor Toshihiko Fukui last week all but doused expectations that the bank would raise interest rates in July. That led investors to continue dumping the yen for currencies such as the euro, which is expected to benefit from two more rates rises this year by the European Central Bank.
"Dollar/yen remains a one-way ticket, euro/yen is setting new highs, and the wide interest rate gap means this will remain a theme throughout the summer," said Greg Salvaggio, senior currency strategist at Tempus Consulting in Washington.
The dollar hit a fresh four-and-a-half-year high above 123.70 yen for the fourth straight session. Meanwhile, the euro surged to a record high of 165.82 yen and a nine-year high of 1.6664 Swiss francs on electronic trading platform EBS.
The dollar, however, lost ground against the euro, which rose as high as $1.3419 in tandem with falling US bond yields. Bond prices have edged higher since an unexpectedly tame reading in US core consumer prices on Friday.
Late in the New York session the euro was trading at $1.3410 - up 0.2 percent from its level late on Friday. The dollar has rallied since early May, tracking a rise in Treasury bond yields to 5-year highs. Over the past three months a series of solid US economic data has led investors to completely wipe out expectations that the Federal Reserve would deliver at least two quarter-point rate cuts this year.
Elsewhere, the New Zealand dollar held steady as the market mostly shrugged off speculation that the Reserve Bank of New Zealand intervened earlier in the day to weaken the highest-yielder among G10 currencies.
The kiwi dollar was barely changed on the day at US $0.7530, still little more than a cent below a peak hit earlier in the month, which was the strongest level since the currency was floated in 1985. The RBNZ unexpectedly lifted rates to 8 percent earlier this month, increasing the currency's allure to speculators as well as retail investors in Japan, where interest rates are 7.5 percentage points lower.
Many analysts say the RBNZ may be fighting a losing battle. "When push comes to shove, interest rates are a more important consideration to the markets than RBNZ intervention," said Marc Chandler, senior currency strategist at Brown Brothers Harriman. Looking ahead, Tuesday's calendar includes US housing starts for the month of May, and Germany's ZEW survey, a gauge of investor sentiment in the euro zone's largest economy.