There has to be some link between the fact

The 17-nation currency advanced toward a one-week high against the dollar after Spain’s borrowing costs fell yesterday when the country sold more than its maximum target of bills. The dollar declined against moncler jackets 14 of its 16 major counterparts on reduced demand for a refuge as Asian equities rallied on signs the U.S. economic recovery is being sustained. The yuan advanced after Premier Wen Jiabao pledged to take measures to bolster exports, fueling optimism over China’s economic growth.

“There has to be some link between the fact that the sovereign supply that’s come onto the market recently has been so well received and what the ECB is doing here,” said Chris Weston, an institutional dealer at IG Markets in Melbourne. “We’ve got a little bit left in this euro rally. We’ll probably see more positive flows,” coming from the long-term refinancing operation, he said.

The 17-nation euro rose 0.2 percent to $1.3110 at 2:32 p.m. in Tokyo from yesterday in New York, when it touched $1.3132, the strongest since Dec. 13. Europe’s shared currency gained 0.1 percent to 101.99 yen. The dollar slid 0.1 percent to 77.80 yen.

Italian and Spanish two-year rates have slipped more than one percentage point since ECB President Mario Draghi announced the unprecedented loans on Dec. 8 as investors bet that banks will use the cash to buy government debt.

Economists forecast banks would seek 293 billion euros ($384 billion), according to the median of 14 estimates in a Bloomberg News survey. Results will be announced today and the loans will start tomorrow.

Funding Needs

“By all accounts, the take-up is expected to be strong and markets would interpret this as positive,” Geoffrey Yu, a currency strategist at UBS AG in London, said in a note to clients. “Not only will some of the funding be recycled back into government debt, but banks would be able to secure financing for the immediate future and ensure financial stability in the coming quarters.”

UBS forecasts the euro will rise to $1.35 cheap moncler winter boots 2011 new style blue purple over the next month and trade at $1.30 in three months time.

Europe’s currency was supported yesterday after Spain sold 5.64 billion euros of three-month and six-month bills, exceeding a maximum target of 4.5 billion euros. The average yield on the three-month debt dropped to 1.735 percent, compared with 5.110 percent when the securities were last issued on Nov. 22.

The euro’s advance pared its decline this year against the greenback to 2 percent. The shared currency has fallen 6 percent against the yen since Dec. 31. The dollar has dropped 4.1 percent versus the yen this year.

The yen was little changed against the dollar after the Bank of Japan left its asset-purchase program unchanged while lowering its assessment of the economy, saying a pick-up has paused. The benchmark interest rate was held at a range of zero to 0.1 percent at the conclusion of a policy meeting today.

The dollar declined against the currencies of Australia and New Zealand as investors sought higher-yielding assets and the MSCI Asia Pacific Index of stocks rose 2 percent.

U.S. Housing

Demand for the greenback was also dented before a report that economists predict will show sales of previously owned homes in the U.S. rose in November. Purchases probably increased 2.2 percent, according to a Bloomberg News survey before data from the National Association of Realtors today.

Better U.S. economic data is unlikely to boost demand for the dollar given the Federal Reserve’s commitment to keeping the key rates near zero through mid-2013, said IG Markets’ Weston.

“We don’t think the good data will translate into dollar inflows especially against the risk currencies,” he said. “It’s likely to benefit the global growth currency trade, so the Aussie is going to be the place to be if we continue to see this data push up.”

The Australian dollar climbed as much as 0.7 percent to $1.0148 the strongest since Dec. 13. New Zealand’s currency gained 0.6 percent to 77.23 U.S. cents.

China’s premier said the nation will stabilize policies on exports, including rebates and capital support to small companies, according to a statement posted on the government’s website yesterday.

Wen’s comments boosted sentiment, said Banny Lam, a Hong Kong-based economist at CCB International Securities Ltd., a unit of China’s second-largest bank. “Inflation is easing but it will still hover at a relatively high level next year. That favors a stronger yuan to lower import prices.”

The yuan gained 0.1 percent to 6.3410 per new arrival moncler 2011 tulsa women jackets white dollar, according to the China Foreign Exchange Trade System. The People’s Bank of China raised the reference rate 0.16 percent to 6.3248, the strongest level since Nov. 9. The currency is allowed to trade 0.5 percent on either side of the daily fixing.