RedWine
03-09-2008, 05:13 AM
Economic Reports Send Dollar to New Low
Latest Unfavorable Economic Data Drops Dollar to Another Record Low Against the Euro
NEW YORK (AP) -- The dollar sank to another record low against the euro Wednesday, with a growing list of economic reports pointing to a worsening U.S. climate.
The euro rose to $1.5302 before dropping back slightly to $1.5262 in late New York trading. The new low for the dollar broke through the previous record set Monday at $1.5275.
The euro had bought $1.5208 in New York late Tuesday.
The British pound was up to $1.9916 from $1.9859 the previous night.
On Wednesday, reports showed that U.S. factories saw demand for their products drop sharply in January, while the country's service sector contracted last month.
They provided fresh evidence of weakness in an economy hit by housing and credit crises -- weakness that has raised expectations that the U.S. Federal Reserve will continue to cut interest rates.
Speculation has mounted that the Fed might cut rates by as much as three-fourths of a percentage point this month. Lower interest rates can jump-start a nation's economy. But they can also weaken its currency as traders transfer funds to countries where they can earn higher returns.
By contrast, the European Central Bank is expected to leave its benchmark rate unchanged at 4 percent Thursday following two months of inflation in which inflation has run at 3.2 percent -- well above the bank's stated goal of at or near 2 percent.
There is more uncertainty over whether the Bank of England will cut rates from their current 5.25 percent Thursday.
In other New York trading, the dollar rose to 103.87 Japanese yen Wednesday from 103.14 yen, but it slipped to 1.0360 Swiss francs from 1.0363 Swiss francs. The dollar rose to 1.0139 Canadian dollars from 1.0042 Canadian dollars.
Latest Unfavorable Economic Data Drops Dollar to Another Record Low Against the Euro
NEW YORK (AP) -- The dollar sank to another record low against the euro Wednesday, with a growing list of economic reports pointing to a worsening U.S. climate.
The euro rose to $1.5302 before dropping back slightly to $1.5262 in late New York trading. The new low for the dollar broke through the previous record set Monday at $1.5275.
The euro had bought $1.5208 in New York late Tuesday.
The British pound was up to $1.9916 from $1.9859 the previous night.
On Wednesday, reports showed that U.S. factories saw demand for their products drop sharply in January, while the country's service sector contracted last month.
They provided fresh evidence of weakness in an economy hit by housing and credit crises -- weakness that has raised expectations that the U.S. Federal Reserve will continue to cut interest rates.
Speculation has mounted that the Fed might cut rates by as much as three-fourths of a percentage point this month. Lower interest rates can jump-start a nation's economy. But they can also weaken its currency as traders transfer funds to countries where they can earn higher returns.
By contrast, the European Central Bank is expected to leave its benchmark rate unchanged at 4 percent Thursday following two months of inflation in which inflation has run at 3.2 percent -- well above the bank's stated goal of at or near 2 percent.
There is more uncertainty over whether the Bank of England will cut rates from their current 5.25 percent Thursday.
In other New York trading, the dollar rose to 103.87 Japanese yen Wednesday from 103.14 yen, but it slipped to 1.0360 Swiss francs from 1.0363 Swiss francs. The dollar rose to 1.0139 Canadian dollars from 1.0042 Canadian dollars.