Dollar Rises vs Euro on Credit Crunch Fears

The dollar rose against the euro but slipped against the yen on Thursday as fears about the effects of the credit crunch and falling equity markets led investors to pare back on profitable trades.

After a report showed core U.S. consumer inflation in October was in line with forecasts, dealers began cutting their bets against the dollar, which had become quite stretched.

This year the dollar has dropped 9.8 percent against the euro as two interest-rate cuts from the Federal Reserve since September pushed investors away from U.S. assets.

 On Thursday the euro slipped 0.2 percent against the dollar, trading at $1.4625, more than a cent off record highs above $1.4750 hit last week.

The New York Board of Trade's dollar index, which tracks the greenback against a basket of six major currencies, rose 0.2 percent to 75.957.

The dollar fell 0.7 percent to 110.55 yen, weighed down as investors cut back on carry trades, in which low-yielding currencies such as the yen are borrowed to fund purchases of higher-yielding ones.

Dollar Rises vs Euro on Credit Crunch Fears, Reuters
11/15/2007 8:50:26 AM