The single currency continued to advance yesterday, but has slid sharply today as investors covered short positions

The single currency advanced for the fourth straight day yesterday, reaching its highest point since September last year at 1.4768.

• Risk appetite was maintained yesterday, as better-than-expected unemployment claims in the US and strong building permits figures climbed to their highest point since December 2008.
  
• Additionally, the euro was pushed higher as the Philadelphia Fed business index rose to 14.1 points in September from 4.2 in August, beating market expectations of an increase to levels around 8.0, spurring investors to sell the greenback and buy higher-yielding assets.
  
• Movements in the markets though were relatively muted, with the euro struggling to break through the 1.4750 level.
  
• Some analysts are now hypothesizing that the dollar could be replacing the yen as the new carry trade, explaining its recent weakness.
  
• However, the selling of the greenback has abated today, allowing it to edge back up against the single currency, as investors cover short positions in the wake of the dollar’s slide during the week.