Dollar Rises to Six-Month High


The dollar rose to a six-month high against the euro on evidence the greenback will be the main beneficiary from a global economic slowdown as German business confidence dropped in August more than forecast.

The U.S. currency increased to the highest level versus the Australian dollar in almost a year and gained versus the New Zealand dollar. Sterling declined to the weakest level versus the dollar in two years as an industry report showed mortgage approvals held last month near a decade low.

The dollar increased 0.7 percent to $1.4650 per euro at 10:30 a.m. in New York, from $1.4754 yesterday. It touched $1.4571, the strongest level since Feb. 14. The dollar rose 0.3 percent to 109.64 yen, from 109.30. The euro fell 0.4 percent to 160.63 yen, from 161.26 yesterday, after reaching 159.99, the lowest level since May 12.

The greenback has risen against all of the other major currencies this month. Its gains range from a 10.4 percent advance against the Australian dollar to a 1.4 percent increase versus the Mexican peso.

The ICE futures exchange's Dollar Index, which compares the greenback against the currencies of six U.S. trading partners, rose to 77.619, its highest level since Dec. 26.

The Aussie dropped 0.7 percent to 85.68 U.S. cents after reaching 84.94 cents, the weakest since September. The New Zealand dollar lost 1.2 percent to 69.54 cents.

The euro has lost more than 8 percent versus the dollar since touching an all-time high of $1.6038 on July 15. It decreased as the European economy contracted in the second quarter and crude oil dropped more than 20 percent from a record $147.27 a barrel set last month.

The dollar rose against the yen as a private report showed consumer confidence increased in August more than forecast on cheaper gasoline prices. The New York-based Conference Board's confidence index rose to 56.9 from 51.9 in July.

The Commerce Department reported that U.S. new home sales rose to an annual rate of 515,000 in July from a revised 503,000 in the previous month. The median forecast of 76 economists surveyed by Bloomberg News was for a decrease to 525,000 from a previously reported 530,000.

U.S. economic growth may stall in the second half of 2008 as financial strains continue to tighten credit, said Dallas Federal Reserve Bank President Richard Fisher in an Aug. 25 interview with Dow Jones.


TradingEconomics.com, Bloomberg
8/26/2008 8:54:51 AM