Greenback Falls as Stimulus Plan Boosts Risk Appetite

The dollar and yen weakened versus other key currencies Monday as US equity markets continued impressive gains buoyed by President-elect Barack Obama's pledge to spend more on infrastructure since the 1950s. This helped support risk appetite and lessen safe haven demand for the low-yielding currencies. The yen, while little changed against the greenback, fell versus other major currencies on renewed carry-trade interest. The pound and Swiss franc rose. The Australian and Canadian dollars advanced as crude oil and other commodity prices gained on Obama's spending plan to revive the US economy.

The EUR/USD rose the most in two weeks as European Central Bank council member Ewald Nowotny indicated the ECB won't necessarily cut interest rates again next month. The pair has been trading sideways since late-October between the 1.24-area support and the 1.31-area resistance.