Euro Advances as China, Australia Growth Buoy Risk Appetite

The euro gained against the dollar and yen as economic data showing growth in the Asia-Pacific region boosted demand for currencies that are perceived as higher-yielding.

The kiwi and Aussie dollars climbed as New Zealand central bank Governor Alan Bollard raised the key interest rate from a record low and Australia’s jobless rate fell. South Korea’s won slumped to a two-week low after the government said it will act to curb volatility in capital flows. The euro extended gains after Reuters reported that the head of China’s pension fund said the shared currency will survive Europe’s debt crisis.

“The numbers generally have been fairly robust into the second quarter, and the real uncertainty is what happens in the second half of the year,” said Mitul Kotecha, head of global currency strategy in Hong Kong at Credit Agricole CIB. Improved risk appetite “may be benefiting the euro, but the impact is fairly limited, and euro-dollar will struggle over $1.20.”

The euro climbed to $1.2042 as of 7:30 a.m. in London from $1.1979 in New York yesterday. It touched $1.1877 on June 7, the weakest since 2006. The currency rose 0.5 percent to 109.60 yen. It reached 108.08 yen on June 7, the lowest since November 2001. The dollar was at 91.21 yen from 91.30.

Asian stocks advanced for the second day this week as government data showed China’s exports jumped 48.5 percent in May from a year earlier, the biggest gain in more than six years. Japan said its economy expanded more than initially estimated in the first quarter, driven by exports and an upward revision to consumer spending.  >>