The dollar fell against the euro, ending the longest rally since April 2010, as stocks gained and Treasuries fell, signaling renewed demand for riskier assets.
The euro rose versus the greenback and pound after Germany’s top court rejected constitutional challenges to the nation’s participation in the region’s rescue funds. The Dollar Index declined from an eight-week high before the Federal Reserve releases its so-called Beige Book, which provides an assessment of regional economic conditions.
“There is a relief rally today,” said Paresh Upadhyaya, head of Americas G-10 currency strategy in New York at Bank of America Corp.. “The Swiss franc was the No. 1 anti-peripheral currency, and that baton is being passed on to Norway and Sweden. Those currencies are likely to outperform the euro in coming weeks.”
The Standard & Poor’s 500 Index gained 1.7 percent and the Stoxx Europe 600 Index advanced 2 percent. Treasury 10-year note yields rose five basis points to 2.03 percent after reaching a record low yesterday.
The U.S. currency depreciated against most of its 16 most- traded counterparts amid speculation Fed Chairman Ben S. Bernanke will signal more monetary easing in a speech tomorrow. The Federal Open Market Committee will gather for a two-day meeting on Sept. 20.
Canada’s dollar remained higher against its U.S. counterpart after the Bank of Canada kept its main interest rate unchanged and said there’s a “diminished” need for a rate increase.