Dollar Falls Vs Euro

The dollar fell the most against the euro in more than a week as New York state manufacturing shrank in June and Group of Eight finance ministers stopped short over the weekend of calling for a strong U.S. currency.

An index tracking the dollar against the currencies of six U.S. trading partners dropped from the highest level since February. The Norwegian krone was one of the biggest gainers versus the dollar among the major currencies and the Canadian dollar appreciated the most in almost a month as crude oil reached a record $139.89 a barrel.

The dollar declined 0.6 percent to $1.5478 per euro at 4 p.m. in New York, from $1.5380 on June 13. The U.S. currency traded at 108.09 yen, compared with 108.19. The yen dropped 0.6 percent to 167.29 versus the euro, from 166.35, and touched 167.68, the weakest level since Oct. 15.

The correlation of the dollar against the euro and oil prices is minus 0.93 for the past year, according to Bloomberg calculations based on value changes, indicating they have moved in the opposite direction 93 percent of the time.

The G-8, which comprises the U.S., Japan, Russia, Germany, France, the U.K., Italy and Canada, stuck to its practice over the weekend of not making a joint comment on currencies when central bankers are absent.

The U.S. currency rose last week the most against the euro since 2005 as Fed Chairman Ben S. Bernanke said economic risks have faded, raising speculation policy makers will increase borrowing costs this year to contain inflation. The yield on the two-year Treasury note posted its biggest weekly increase in 26 years last week, rising 66 basis points to above 3 percent.

Dollar Falls Vs Euro, Bloomberg
6/16/2008 1:20:42 PM