Dollar Falls Against Euro, Yen

The dollar weakened against the euro, extending last year's 10 percent decline, and had its biggest drop versus the yen since August after a private report showed U.S. manufacturing unexpectedly contracted in December.

The U.S. dollar fell the most against the yen and Swiss franc among the 16 most actively traded currencies as interest rate futures indicated 100 percent odds the Federal Reserve will cut borrowing costs this month. Fed policy makers said the economy in 2008 will be ``somewhat more sluggish'' than they anticipated in October, minutes from the Dec. 11 meeting showed.

The dollar fell to $1.4726 per euro at 4:21 p.m. in New York from $1.4592 yesterday. It dropped to $1.4967 on Nov. 23, the lowest since the euro's debut in 1999. The dollar decreased 1.8 percent to 109.59 yen, touching 109.22, the lowest since Nov. 28. It's the biggest drop since Aug. 16, the day before the Fed cut the discount rate to mitigate a rout in credit markets. The euro declined 0.9 percent to 161.39 yen.

Dollar Falls Against Euro, Yen, Bloomberg
1/2/2008 2:01:58 PM