Dollar Falls Against Euro

The dollar fell against the euro after a government report showed consumer spending slowed in July and crude oil prices rose.

The greenback pared its biggest monthly advance since the European currency began trading in 1999. The pound slid to near a record low against the euro after a Bank of England policy maker said lower interest rates are needed to avoid a recession.

The dollar depreciated 0.2 percent to $1.4738 per euro at 9:04 a.m. in New York, from $1.4706 yesterday. The U.S. currency decreased 0.8 percent to 108.63 yen, from 109.50.

The greenback has risen versus all of the other major currencies this month on speculation the economic slowdown that began in the U.S. is spreading to the rest of the world. The dollar has gained 5.9 percent versus the euro, the best performance since the European currency's debut.

U.S. personal spending increased 0.2 percent last month after a 0.6 percent advance in June, the Commerce Department said today in Washington. Personal income fell 0.7 percent in July after climbing 0.1 percent in the prior month.

Crude oil for October delivery rose 2.5 percent to $118.45 a barrel on concern a tropical storm threatening U.S. oil rigs in the Gulf of Mexico will strengthen into the worst hurricane since Katrina. The euro-dollar exchange rate and oil have had a correlation of 0.9 in the past year, according to Bloomberg calculations. A reading of 1 would mean they moved in lockstep.

The ICE futures Exchange's Dollar Index, which compares the greenback against the currencies of six U.S. trading partners, fell 0.3 percent to 76.938, cutting its monthly advance to 5.1 percent. It reached 77.619 on Aug. 26, the highest this year.

Dollar Falls Against Euro, Bloomberg
8/29/2008 6:12:16 AM