LONDON –- The European single currency soared close to a one-year high against the dollar on Thursday, as the greenback was hit by growing economic optimism and super-low US interest rates, analysts said.
Traders sold safe-haven assets, such as the dollar, amid growing hopes about the global economic outlook, they added.
The euro jumped as high as 1.4767 dollars in London morning deals, a level last seen on September 25, 2008. It later stood at 1.4745, up from 1.4708 late in New York on Wednesday.
Investors also switched away from the greenback to buy riskier assets after Wall Street stocks jumped to the highest level in 11 months on the back of better factory data.
Speculators continued to use the dollar to fund carry trades -- borrowing cheap credit to invest in higher-yielding assets elsewhere -- taking advantage of the super-low lending rates in the United States.
"It is such a nice environment for carry trades again: better liquidity, rising risk appetite, lower foreign exchange volumes... Everything fits so nicely," said Ulrich Leuchtmann, head of foreign exchange research at Commerzbank.
Federal Reserve chairman Ben Bernanke had said on Tuesday that the recession in the United States was "very likely over".
Since December 2008, the US central bank has held its key federal funds rate at a record low range of zero to 0.25 percent as it seeks to to spur lending and economic activity.
The European Central Bank's main interest rate has stood at a record low of 1.0 percent since last May.
"Currency investors are searching for yield, and the dollar is the lowest yielding because of ultra-low US interest rates," said GFT analyst David Morrison.
"Traders listen to Bernanke and think that this situation will continue for some time. In addition, they are worried about the dollar -- massive stimulus (with more to come?) means over-supply and so devalues the greenback."
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