The dollar climbed to a two-week peak against the euro on Wednesday, as gains in global stock markets and improved data out of China drew investors into riskier bets than low-yielding currencies in Europe and Japan. The euro and yen have gained strongly against the dollar in recent weeks as investors sought traditional safe havens for their money on a darkening outlook for banks and economic growth, underlined again by downgraded forecasts from the International Monetary on Tuesday.
Softer-than-expected US producer prices and retail sales numbers last month briefly pushed the dollar lower, but Wednesday's dollar uptrend remained intact. "The weak retail sales and PPI (producer price index) data had virtually no impact on the dollar, and it's probably because that there are portfolio flows going into US equities," said Sebastien Galy, currency strategist at Deutsche Bank in New York. "This is giving the dollar a bit of a bid."
Still the outlook for the dollar stayed weak. After gaining steadily for 1-1/2 years amid US interest rate hike expectations, the dollar has hit a wall and many in the market believes that the greenback's long-term rally is near its end. Expectations of a deal to stabilise oil output, and what seems like a bottoming out of expectations for US interest rate rises, have also helped the dollar. It rose 0.5 percent to 109.08 yen, up from lows of 107.61 hit on Monday. The euro fell 0.9 percent against the dollar to $1.1278. It fell as low as $1.1274, a two-week low.