The euro cleared a record high against the yen yesterday and remained within striking distance of this week's all-time peak versus the dollar as traders bet its bull run would continue in 2005.
The single currency rose above 141.60 yen in thin Tokyo trade, extending Wednesday's gains on technical moves and on concerns that Sunday's devastating tsunami that has killed over 120,000 people around the Indian Ocean could hurt economic growth throughout Asia.
"Obviously the tsunami in Asia has been an element. You can't quantify it but the Australian dollar and the yen have suffered so it is affecting sentiment a bit," said Mr Lee Ferridge, senior proprietary trader at Rabobank.
Mr Ferridge also said fears that Japanese authorities may intervene in the foreign exchange market over the holiday period to weaken the yen had not helped the Japanese currency.
The euro stood at $1.3624 against the dollar in afternoon trade, ahead slightly on the day and close to a record of $1.3647 set in the previous session, according to data on electronic trading platform EBS.
The dollar weakened after a below-consensus snapshot of regional US business activity kept the currency under selling pressure. The Chicago purchasing managers index fell to 61.2 in December from 65.2 in November, below economists' forecasts of a 63.0 reading.
The dollar had been trading slightly higher against some currencies before the data were released. But the decline in the headline number - and a weak employment component, which showed contraction in the labour market - was enough to push the dollar down across the board.
Sterling recovered a little from Wednesday's 14-month low against the euro after better-than-expected consumer confidence and housing market data.
The euro was unruffled by comments from German chancellor Mr Gerhard Schröder and Italian prime minister Mr Silvio Berlusconi who expressed alarm at the the currency's rise.
