The yen fell against all of the major currencies, dropping to the lowest level this year against the euro, on speculation traders increased purchases of assets funded by loans in Japan. The dollar rose to a seven-week high against the yen.
The dollar rose 0.9 percent to $1.5758 per euro at 9:22 a.m. in New York, from $1.5908 yesterday. The U.S. currency increased 1.6 percent to 104.09 yen, from 102.48 yesterday. It touched 104.43 yen, the highest level since Feb. 29. The euro rose 0.6 percent to 164.03 per yen, from 163.03 yesterday.
The pound traded within a cent of $2 on speculation the Bank of England may take mortgages off lenders' balance sheets. Sterling strengthened 1 percent to 79.09 pence per euro.
The yen fell 2.4 percent versus South Africa's rand and dropped 1.7 percent versus the pound as a gain in U.S. stock futures encouraged investors to resume carry trades, in which they get funds in a country with low borrowing costs and invest where returns are higher.
Japan's 0.5 percent target lending rate, the lowest among developed nations, compares with 11.5 percent in South Africa and 5 percent in the U.K.
Among the major currencies, the dollar posted its biggest gain against the Swiss franc as traders moved away from the Swiss currency, regarded as a haven in times of turmoil. The dollar rose more than 1 percent to 1.0244 against the Swiss franc.
Revenue at Citigroup, the biggest U.S. bank by assets, plunged 48 percent to $13.2 billion, compared with the average estimate of $11.1 billion from analysts surveyed by Bloomberg. Citigroup reported a $5.11 billion first-quarter loss.
Stock markets across Europe extended gains after Citigroup's results, with Germany's Dax Index climbing 1.4 percent. Standard & Poor's 500 Index futures expiring in June added 1.2 percent.
Futures on the Chicago Board of Trade show a 10 percent chance the Fed will cut its 2.25 percent target rate for overnight lending between banks by a half-percentage point this month, down from 46 percent a week ago. The rest of the bets are on a quarter-point reduction.
The Dollar Index traded on ICE futures in New York, which tracks the currency against those of six trading partners, rose a second day and was at 71.831 today, from 71.680 yesterday. It dropped to a record of 70.698 on March 17.
The euro advanced earlier against the dollar after a government report showed German producer prices rose at the fastest pace in 15 months, adding to speculation that the European Central Bank will keep its main refinancing rate at a six-year high of 4 percent.
The ECB must act if more inflation risks emerge, Euro magazine quoted central bank council member Axel Weber as saying in an interview. The currency rose to a record high of $1.5983 against the dollar yesterday.