Dollar and yen higher as risk currencies ease The dollar and yen strengthened against other major currencies amid mild profit-taking in the currencies markets, with the Australian dollar and the UK pound among the biggest fallers on Friday. The euro was 0.1 per cent down at $1.2265 as Spanish 10-year bond yields remained above 7 per cent. The UK pound dipped back below $1.57, losing 0.2 per cent against the dollar to $1.5688. Analysts attributed the moves to profit-taking at the end of a week that saw many risk-related currencies make decent gains, such as the Australian dollar, sterling and Swedish krona. Market participants said that volumes in the currencies market were low for the time of year. "In view of a completely empty data calendar and the fact that Europe's policy makers are heading for their summer holidays again, the markets are lacking fodder," said analysts at Commerzbank. The longer there is no news on the euro area or the US economy, the more absurd the headlines appear which are used to justify buying or selling the euro. Some analysts were studying the effect of the recent rises in food prices on currencies linked to commodities, following gains in the CRB index, which tracks commodity prices. "In the dumbest of simple correlations, the winner from a CRB gain is the Australian dollar, followed by the Russian rouble and Canadian dollar," said Kit Juckes at Société Générale. With industrial commodities much less well-supported than foods, it's more complex than that but the overvalued Australian dollar is everyone's darling at the moment. Others were focusing on the divergence between industrial commodity prices, which are falling, and soft commodities. On that measure, analysts at Morgan Stanley said the Australian dollar should begin to fall. "We have analysed the impact of the divergence in food and industrial commodity prices and find in the current environment the Australian dollar is most at risk, while the US dollar is best placed to benefit among the G10 currencies," they wrote. The New Zealand dollar's protection via its exposure to food prices is limited, given the difficulty it faces in breaking away from the broader commodity price trends. The Australian dollar fell 0.1 per cent to $1.0420.