Tokyo - The dollar rose against the euro and yen on Wednesday as investors' appetite for risk surged on upbeat US economic data and China's fresh stimulus measures.
Underpinning market sentiment were better-than-expected reports on the sluggish US manufacturing sector, construction spending and auto sales.
The data suggested the world's top economy was still resilient even as global growth sputters, and put the chances of another Federal Reserve interest rate rise this year back into play - a plus for the greenback.
The positive mood on trading floors stoked an equities rally across Asia and drew investors out of the yen. The unit is seen as a safe bet in times of turmoil and is watched as a barometer of investor confidence.
“The risk-on sentiment has relegated the yen to the bottom of the leader board,” National Australia Bank said in a commentary early on Wednesday.
“The improvement in sentiment has also provided a lift to commodity prices and as a result commodity related currencies have outperformed.”
In Tokyo, the greenback was nearly flat at 113.92 yen from 113.94 yen in New York late on Tuesday, but it was well up from 112.72 yen in Tokyo earlier in the day.
The euro ticked down to $1.0858 and 123.71 yen from $1.0867 and 123.82 yen in US trade on Tuesday.
Market sentiment also had a boost after the People's Bank of China announced late on Monday it was cutting its reserve requirement for banks.
The move is aimed at encouraging lending and stimulating activity in the world's number two economy - a key driver of global growth.
In other trading, the Australian dollar jumped 0.71 percent against the dollar after figures showed the economy grew more than expected in the fourth quarter, hinting that the resource dependent country is on a recovery track.
Riskier, but higher yielding, emerging market currencies also booked gains.
The Indonesian rupiah gained 0.51 percent against the US unit, while the oil-linked Malaysian ringgit rose 0.24 percent and the Philippine peso was up 0.22 percent.
AFP