Dollar Falls Against Euro as Risk Appetite Grows

The dollar fell against the euro in Asia on Monday as risk appetite grew after a much-awaited speech by U.S. Federal Reserve chairman Ben Bernanke.

Currency rates barely moved after the ruling Democratic Party of Japan elected Finance Minister Yoshihiko Noda as new leader.

The euro bought $1.4535 in Tokyo afternoon trade, up from $1.4490 in New York late Friday. It went up to 111.42 yen from 111.10.

The euro rose as risk sentiment improved on gains in most Asian stock markets following Wall Street's strong close on Friday, said a senior dealer at a major Japanese trust bank.

Still, ahead of the major US economic indicators such as manufacturing data Thursday and nonfarm payrolls data Friday, investors are unlikely to push the euro too high, he told Dow Jones Newswires.

The dollar traded at 76.65 yen, flat from New York, and rose to 0.8079 Swiss francs from 0.8063 francs.

Fiscal hawk Noda, 54, will likely be elected Japan's prime minister on Tuesday in parliament where the ruling DPJ controls a majority in the lower house.

Dealers said Noda's election should not hurt the yen because investors have seen what action he took against the yen as finance minister and how the currency continued to strengthen despite it.

On Friday Bernanke offered no new stimulus measures in his speech at a central bankers' conference but indications that the prospects for later easing were high, said analysts.

Bernanke said the U.S. Federal Reserve still had a range of monetary tools that could help the economy, which it will review in an expanded meeting of the policy-making Federal Open Market Committee (FOMC) in September.

He also said he expected U.S. growth in the second half of the year to improve after a first half in which expansion in the world's largest economy was nearly stagnant.

"Risk sentiment has improved across the board but the higher yields (on U.S. bonds) and higher gold suggest that markets are divided on the prospects for the need for more policy action," National Australia Bank said in a note.

"This is unlikely to last and should settle on the one side or other," it said.

"The September 20 FOMC meeting has been extended to two days. This suggests that the prospects for policy easing are high," it said, arguing this should keep the dollar under pressure.

The market was unmoved after a meeting of Japanese finance officials unveiled a list of policy proposals to the new administration for dealing with the effects of the strong yen.

The dollar was mostly lower against other major Asian currencies.

It fell to 42.30 Philippine pesos from 42.49 on Friday, to 1,073.50 South Korean won from 1,082.20 and to 8,525.00 Indonesian rupiah from 8,560.00.

The dollar edged up to Sg$1.2064 from Sg$1.2058 and was flat at 29.97 Thai baht and at Tw$29.00.