The dollar reasserted its dominance today, hitting 20-month highs against the yen for a third straight day while keeping the euro at three-month lows.
A flight to quality in the wake of recent global equity falls were said to be spurring buying of safe-haven US treasuries and thus boosting the dollar, which has gained over four per cent against the euro and around three per cent against the yen this week.
There was also talk some US pension funds may be repatriating foreign investments to cover losses at home, though evidence of such flows was limited, analysts said.
The ECB's reluctance to cut interest rates was continuing to raise concern about the euro zone's growth prospects, dealers said.
The ECB kept rates unchanged yesterday and is now the only major central bank not to have cut interest rates in response to slowing global growth.
In contrast, the market has raised its expectations for US easing and is pricing in a 60 per cent chance of a 75 percentage point cut by the Federal Reserve next Tuesday. Such a move was seen boosting the chance of a speedy US recovery later this year.