Dollar Trades Near 7-Week High


The dollar traded near a seven-week high against the euro as the price of a barrel of oil tumbled to the lowest level in three months.

The U.S. currency was near its highest versus the yen in more than a month on optimism lower crude prices will bolster economic growth in the world's largest consumer of the fuel. Australia's dollar declined to a four-month low and Canada's traded near its weakest in almost a year as prices of commodities the nations export fell.

The dollar traded at $1.5477 per euro at 11:18 a.m. in Tokyo from $1.5454 yesterday, when it touched $1.5447, the strongest level since June 16. The U.S. currency was at 108.38 yen, little changed from yesterday. It earlier rose to a seven- week high of 108.48. The euro traded at 167.76 yen from 167.42. The dollar may rise to $1.5435 versus the euro and 108.50 yen today, Soma forecast.

Oil's decline also supported dollar higher versus the euro. The euro-dollar exchange rate and oil had a correlation of 0.9 in the past year, according to Bloomberg calculations. A reading of 1 would mean they moved in lockstep.

Oil has lost more than $28 since touching a record of $147.27 a barrel in New York on July 11 as unprecedented fuel costs prompted U.S. consumers to limit spending.

The Federal Reserve left borrowing costs unchanged yesterday at 2 percent, saying ``downside risks'' to growth remain, while inflation is a ``significant concern.'' Dallas Fed President Richard Fisher dissented for a fifth time this year, preferring an increase.

 


TradingEconomics.com, Bloomberg
8/6/2008 6:46:43 AM