TOKYO (MarketWatch) -- The euro gained more ground against the dollar in Asia Monday as signs of strong demand for commodities including gold added to hopes that the world's economy is recovering, prompting traders to buy high-risk currencies.
Meanwhile the release in the session of unexpectedly strong Japanese gross domestic product data for the third quarter had no clear impact on the currency markets, which were focused more on stock and commodities prices as well as coming U.S. events.
The euro climbed to an intraday high of $1.4973 on EBS, about half a U.S. cent higher compared with late Friday in New York. Its appreciation comes as spot gold rose to a fresh record of $1,127 a troy ounce during Asian hours, prompting speculators to unwind bets against currencies that are considered riskier than the U.S. unit but pay the buyers more interest, such as the Australian dollar and sterling as well as the euro.
"Gains in gold prices lifted demand for currencies of commodities-exporting nations like the Aussie against the U.S. dollar," said Osao Iizuka, chief foreign-exchange trader at the Sumitomo Trust & Banking Co. "Then the selling of the U.S. dollar spread across other currencies, causing the euro to gain ground against it."
Until the U.S. Thanksgiving holiday on Nov. 26, around which time the volume of global currency trades often starts shrinking as U.S. players go on vacation, the euro could rise to $1.5300 amid a continuing broad downtrend in the greenback, Iizuka said. A fall below $1.4700 is unlikely over that period, he added.
Japan's government, meanwhile, said the nation's GDP grew a price-adjusted 1.2% in July-September from the prior quarter, or a 4.8% increase on an annualized basis. The result beat the 0.6% on-quarter growth and 2.2% annualized rise expected by economists polled by Dow Jones Newswires.
But the yen got little boost from the data partly because "market participants weren't sure about how they were supposed to respond" to them, said Motonari Ogawa, director of currency trading in Tokyo at Barclays Capital.
While robust Japanese data should favor the yen in theory, they could also hurt it in the current market environment in which investors often interpret strong data from major economies as a sign of global recovery that should make it less risky to buy higher-yielding currencies, Ogawa said.
Traders were also paying more attention to potentially market-moving events later in the global day, including a planned speech by Federal Reserve Chairman Ben Bernanke, dealers said. U.S. retail sales data for October are also due, with economists polled by Dow Jones expecting a 0.9% on-month gain in overall sales figures.
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