American focus: euro and the yen gained, dollar declined

The dollar fell to a post-World War II low against the yen and dropped versus most currencies on speculation Europe is moving closer to resolving its debt crisis and the Federal Reserve may seek further monetary easing. Investors sold dollars before meetings in Europe this weekend after increasing bets last week to the most in more than a year that the U.S. currency would rally. Fed Chairman Ben S. Bernanke told a congressional committee on Oct. 4 that policy makers stand ready to take additional steps to bolster the “sluggish” economic recovery.

The euro advanced for a fourth day against the dollar, in the longest stretch of gains since July, before two European summits over the next five days. The euro rose against the dollar today as German officials said there are several possible ways of involving the International Monetary Fund to boost the firepower of the European Financial Stability Facility, the region’s rescue fund, to fight the euro-region debt crisis.

Australia’s dollar rallied as stocks and commodities increased, boosting demand for riskier assets.

Canada’s dollar rose for a second straight day, advancing 0.6 percent to C$1.0097 versus the greenback as the nation’s annual inflation rate unexpectedly rose last month. The consumer price index increased 3.2 percent in September from a year earlier, Statistics Canada said. The median forecast of economists was for another 3.1 percent rise.

The yen’s surge today came after it set a record on Aug. 19, which followed a 4.51 trillion-yen ($59 billion) intervention earlier in the month by Japan. The nation has intervened in the foreign-exchange markets three times in the past 13 months to weaken the yen. The currency is up 6.6 percent against the dollar in 2011.

The pound strengthened to a six-week high against the dollar after a government report showed the nation’s budget deficit narrowed in September more than economists forecast.