The US dollar hit 10-month lows against some commodity currencies on Tuesday on a growing appetite for risky assets and lost further ground to the euro after weak US economic data reinforced views that Federal Reserve monetary policy would remain dovish. The Australian dollar hit $0.7817, its highest level against the dollar since last June, while the New Zealand dollar touched $0.7055, also its highest since last June, on the back of gains in oil prices. The Canadian dollar also rallied.
Analysts said a strike by oil workers in Kuwait, which continued for a third day and nearly halved production from the Opec member, boosted crude prices and commodity currencies. Concerns over China's economic growth have also diminished, while the likelihood of a rapid string of Fed interest rate hikes this year has receded, they said. The dollar gained against the safe-haven yen for a second straight day, however, as investors moved into riskier currencies. The dollar was last up 0.43 percent against the yen at 109.28 yen. "The predominant theme is risk on," said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.
"We came into the year concerned about Chinese growth and an aggressive Fed, and we've gotten nothing even remotely similar to where our fears were." The euro was last up 0.5 percent against the dollar at $1.1369 after hitting a six-day high of $1.1382. The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.47 percent at 94.044.