Treasuries gained, pushing the yield on the two-year note to the lowest level in five years. The yen rose against the euro, the Brazilian real and the South African rand on speculation investors will sell higher-yielding assets and pay back low-cost loans in Japan's currency.
The dollar gained 0.4 percent to $1.2599 per euro at 2:30 p.m. in New York, from $1.2650 yesterday. The yen increased 0.2 percent to 121.68 against the euro, from 121.99 yesterday. Japan's currency traded at 96.59 versus the dollar, compared with 96.43.
The yen appreciated 2.2 percent to 41.50 against the real and 1.5 percent to 9.33 versus the rand on speculation investors will unwind carry trades, in which they get funds in a country with low borrowing costs and buy assets where returns are higher. Japan's 0.3 percent target lending rate compares with 13.75 percent in Brazil and 12 percent in South Africa.
The ICE's Dollar Index, a gauge of the greenback against the euro, the yen, the pound, the Canadian dollar, the Swiss franc and Sweden's krona, rose to 87.321 from 86.807 yesterday. The index reached 88.147 on Nov. 13, the highest level since April 2006.
International demand for U.S. financial assets rose more than economists forecast in September. Total net purchases of long-term equities, notes and bonds increased $66.2 billion in September from $21 billion in the previous month, the Treasury said today.