The dollar climbed to four-month highs against the euro and two-week peaks versus the yen on Thursday, bolstered by recent strong U.S. economic numbers as well as ebbing fears about the latest coronavirus that broke out in China few weeks ago.
The safe-haven yen and Swiss franc struggled for a fourth straight session against the dollar, as investors' tolerance for risk increased, encouraged by the Chinese government's efforts to contain the latest coronavirus and limit the economic fallout. The Swiss currency fell to its weakest level in more than a week.
The euro, meanwhile, also tumbled, sliding to a four-month low against the dollar after poor German data, which was in stark contrast to the more robust U.S. economic reports this week.
"U.S. data hasn't been terrible for the most part," said Kathy Lien, managing director of BK Asset Management in New York.
"And it looks like the virus is going to be contained and it's just a matter of time. So until data proves that the virus has a damaging impact on the economy, the market will continue to focus on earnings, which have been relatively good, as well as the strong U.S. data," she added.
Chinese President Xi Jinping told Saudi Arabia's King Salman that China has achieved "positive" results in its prevention and control efforts in fighting the new coronavirus, the country's official Xinhua news agency reported on Thursday. That further added to the optimism.
The People's Bank of China (PBOC), for its part, has pumped hundreds of billions of dollars into the financial system this week to cushion the potentially adverse economic impact of the virus.
"We're seeing credible responses from monetary authorities, in China and it looks like it's soothing market fears of a more entrenched slowdown in the Chinese economy," said Simon Harvey, FX market analyst at Monex Europe in London.
That said, the coronavirus has now claimed 563 lives, with more than 28,000 confirmed infections in China. A Reuters tally also showed that 260 cases have been reported in 31 countries and regions outside mainland China.
In afternoon trading, the dollar rose 0.1% against the yen to 109.99 <JPY=>, and gained 0.2% versus the franc to 0.9756 <CHF=>
The euro fell against the dollar, weighed down by data showing German industrial orders unexpectedly plunged in December. Contracts for German goods fell 2.1% in December from November, the biggest drop since February.
The euro was last down 0.2% at $1.0978 <EUR=>.
Graphic: EURUSD and CESI - https://fingfx.thomsonreuters.com/gfx/mkt/13/1825/1794/EURUSD%20and%20CESI.png
The euro's losses pushed the dollar index up 0.2% at 98.524 <.DXY>, which also benefited from Thursday's solid U.S. initial jobless claims and productivity data.
The dollar index earlier rose to 98.572, its highest since mid-October.
The offshore Chinese yuan, meanwhile, was flat against the greenback, trading at 6.9786 yuan per dollar <CNH=D3>.
(Reporting by Gertrude Chavez-Dreyfuss; editing by Jonathan Oatis and Chizu Nomiyama)
