Dollar Trades Near Record Low

The dollar traded near a record low against the euro after American Express Co. said profits dropped because more consumers defaulted on loans, raising concern the U.S. economic slowdown will deepen.

The currency may extend declines against the yen before reports forecast by economists to show this week that U.S. home sales and durable-goods orders dropped in June. The Australian dollar was close to a 25-year high against the U.S. currency after prices of commodities the nation exports increased.

The U.S. currency traded at $1.5925 per euro at 11:17 a.m. in Tokyo from $1.5922 yesterday. It fell to $1.6038 on July 15, the weakest since the European currency's 1999 debut. The dollar was at 106.42 yen from 106.45 yen. The yen was little changed at 169.48 per euro after touching a record low of 169.91 yesterday. The dollar may fall to $1.5950 per euro and 106.10 yen today, Soma forecast.

American Express, the biggest U.S. credit-card company by purchases, reported second-quarter profits fell 37 percent on bad consumer loans.

Combined sales of new and existing homes dropped 1.3 percent last month, according to the median estimate of economists surveyed by Bloomberg News. A report from the National Association of Realtors on existing-home sales is due July 24, and new-home sales figures are released from the Commerce Department the next day.

Orders for durable goods probably fell 0.3 percent last month. The Commerce Department's report on goods meant to last several years is due July 25.

The U.S. budget deficit will put pressure on the dollar, according to Bill Gross, who manages the world's biggest bond fund at Pacific Investment Management Co. in Newport Beach, California.

Treasury Secretary Henry Paulson and Philadelphia Fed President Charles Plosser are scheduled to speak on the U.S. economy today. Paulson told CBS News on July 20 the economy is in a ``challenging time'' and probably will experience slow growth for months because of higher oil prices.

Declines in the dollar may be limited by speculation U.S. banks can weather credit losses from the subprime mortgage collapse.

Gains in the euro may be limited by speculation an industry report on July 24 will show German business confidence fell in July as higher oil prices and a stronger currency dimmed the outlook for growth in Europe's largest economy.

Dollar Trades Near Record Low, Bloomberg
7/21/2008 8:54:37 PM