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Euro shines after unexpectedly strong German data

Sha Ying | CNBC

The euro climbed to a four-year peak against the yen and rose for a second straight day versus the dollar on Friday after much-stronger-than-expected German business sentiment pointed to a continued rebound in Europe's largest economy.

The euro was 0.3 percent up at 136.68 yen, having risen as high as 136.99 yen. Against the dollar, the euro was 0.3 percent up at $1.3518.

(Read more: As dollar-yen breaks above 100, struggle begins)

Germany's closely watched Ifo survey of business sentiment rose far more than forecast in November, reaching its highest level since April 2012. That added to positive sentiment about German growth, the engine of the euro zone economy.

A ZEW survey this week also showed German investor sentiment at its highest in four years while a purchasing managers index release suggested the private sector's expansion was gaining traction.

(Read more: ECB's Draghi: Nothing new on deposit rates)

"The enthusiastic IFO report has investors comfortable increasing exposure to the euro this morning, pushing euro/dollar back above $1.3500," said Scott Smith, senior corporate FX trader at Cambridge Mercantile Group in Calgary.

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He added that the confidence displayed in Germany during November is positive overall, but noted that recovery in the euro zone's largest economy has failed to bolster the rest of region especially the peripheral nations.

The euro was also supported by comments from European Central Bank President Mario Draghi, who played down the possibility of the bank implementing negative deposit rates.