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Dollar
hits record low against euro
Greenback falls on mixed
report from Commerce Dept.
BERLIN - The U.S. dollar hit an all-time low in thin pre-holiday
trading Thursday against the euro, which breached the $1.35 mark
after a mixed economic report from the U.S. Commerce
Department.After peaking at $1.3506, the euro eased back slightly to
$1.3493, up more than a cent from $1.3381 late Wednesday. The
previous high of $1.3470 was set Dec. 7.
The 12-nation currency has risen sharply since September, when it
was trading for around $1.20, over persistent concerns about the
ballooning U.S. trade and budget deficits.
With no end to U.S. economic problems in sight, analysts see the
trend continuing.
“I can see it finishing the year around $1.35 and we see that it’s
going to be a steady track upward for the euro/dollar in 2005,
finishing the year around $1.40,” said Adrian Hughes, a currency
strategist with HSBC in London.
The dollar fell against other rivals on Thursday. The British pound
rose to $1.9201 in late New York trading, up from $1.9144 late
Wednesday. The dollar fell to 103.70 Japanese yen from 104.08;
1.1440 Swiss francs from 1.1523; and 1.2334 Canadian dollars from
1.2442.
The euro initially fell against the dollar after its 1999 debut, but
it has risen about 63 percent since bottoming out at 82 U.S. cents
in October 2000.
The Commerce Department reported that consumer spending grew by a
modest 0.2 percent in November, slightly weaker than the 0.3 percent
that had been forecast by analysts and far short of the 0.8 percent
reported for October.
At the same time, incomes grew 0.3 percent in November, more than
the 0.2 percent that had been forecast. Still, income growth was
weaker than in October, when it hit 0.6 percent.
Most financial markets around the world will be closed Friday for
Christmas, and the euro spike following the mixed news may have
something to do with the small amount of trading just before the
holiday, Hughes said.
“The markets are not as they typically are, we’re seeing very low
activity and very low risk appetites in the markets for new
positions,” he said.
The U.S. administration says it has a “strong dollar” policy but
also that it will let market forces set the currency’s strength.
Most analysts believe the United States is content to let the dollar
fall because it has been making American exports cheaper.
However, Europe’s fragile economic recovery is export-driven, and
the strong euro has either been making European goods more expensive
overseas or cutting into producers’ profits as they try to hold
prices steady.
© 2004 The Associated Press. All rights reserved. This material may
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