Previous session overview : Traders shrugged off a second straight disappointing report on Germany's economy and an interest-rate hike by China to send the euro higher against the dollar Tuesday.
Some risk appetite returned as market participants downplayed the larger-than-expected drop in Germany industrial production in December. Monday's disappointing report on manufacturing likely tempered expectations heading into the industrial production report, analysts said.
China's central bank said it would rise benchmark lending and deposit rates by 0.25 percentage point. The move is aimed at further blunting rapid growth and inflation.
Interest-rate differentials have been a leading driver of currency trading in recent weeks, so hints at changes to key central bank rates would likely have an increased impact on trading.
The euro was at USD1.3635 in morning trading in New York, from about USD1.3582 late Monday.
The dollar was at JPY82.24 from JPY82.32 late Monday, while the euro was at JPY112.15 from JPY111.82.
The Australian dollar gave up earlier gains after China's central bank hiked rates. The Australian dollar was at USD1.0128 after hitting a high of USD1.0192 earlier in the day.
Market expectation : General dollar weakness could be contributing to the euro's gains Tuesday, analysts said.
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