Dollar Rises to Three-Week High


The dollar strengthened to a three- week high against the euro on speculation the Federal Reserve will signal that it's close to pausing after making six reductions in the target lending rate.

The currency is headed for its first monthly advance against the euro this year on signs the U.S. slowdown is spreading to Europe. The pound faces its biggest monthly loss this year against the dollar after a Bank of England report showed mortgage approvals in the U.K. sank to the lowest level since at least 1999.

The dollar rose 0.6 percent to $1.5559 per euro at 9:03 a.m. in New York, from $1.5657 yesterday, for a monthly gain of 1.4 percent. It touched $1.5541, the strongest since April 3. The dollar dropped 0.3 percent to 103.92 yen, from 104.19 yesterday. The euro fell 0.8 percent to 161.74 yen, from 163.11.

The U.S. currency has increased 4 percent against the yen and 1.4 percent versus the euro this month. The dollar fell to $1.6019 against the euro on April 22, the lowest level since the European currency debuted in 1999.

Futures on the Chicago Board of Trade show an 82 percent chance the Fed will cut the 2.25 percent target rate for overnight lending between banks by a quarter-percentage point and a 71 percent likelihood that the rate will be held at that level in June.


TradingEconomics.com, Bloomberg
4/29/2008 6:34:32 AM