Dollar Falls Most Against Euro in Month

The dollar fell the most against the euro in a month and depreciated versus the yen as a drop in consumer confidence and a surge in crude oil to a record increased concern U.S. economic growth will slow., Bloomberg 5/16/2008 11:03:15 AM

The currency dropped for the first time in four days against the euro and was down against all but one of its major counterparts. The Australian dollar touched a 24-year high against the greenback as crude oil pushed prices of other commodities higher.

The dollar decreased 0.9 percent to $1.5591 per euro at 1:52 p.m. in New York, from $1.5448 yesterday. It earlier broke through $1.56 for the first time since May 1. The U.S. currency dropped 0.9 percent to 103.85 yen, from 104.74. The euro traded at 161.91 yen, compared with 161.79 yesterday.

The U.S. currency, which has risen 3.4 percent from a record low of $1.6019 against the euro on April 22, is down 0.7 percent this week, its second straight decline. The yen has fallen 1.7 percent against the euro this week, the biggest drop since mid-April. It's down 0.9 percent versus the dollar.

Crude oil rallied to the all-time high of $127.82 a barrel, leading commodities higher, as Goldman Sachs Group Inc. raised its forecast for the second half of this year to an average of $141 a barrel, citing supply constraints.

The correlation coefficient between oil and the euro-dollar exchange rate has been 0.95 for the past year, indicating they have moved in the same direction 95 percent of the time. The correlation is calculated based on the price changes of oil and the currencies.

The dollar weakened as a report showed confidence among U.S. consumers fell in May to the lowest level in almost 28 years. The Reuters/University of Michigan consumer sentiment index dropped to 59.5 this month, from 62.6 in April. The median forecast of 65 economists surveyed by Bloomberg News was for a reading of 62.

Dollar Falls Most Against Euro in Month