Dollar Falls


The dollar fell against the euro as a contraction in New York State manufacturing added to evidence the world's largest economy has fallen into a recession.

The yen dropped against the euro as U.S. stocks pared their decline, slowing the sale of higher-yielding assets funded in Japan's currency. The pound was the biggest gainer versus the dollar among major currencies as investors judged its first drop below $1.50 in 6 1/2 years last week as difficult to sustain.

The dollar declined 0.8 percent to $1.2712 per euro at 2:43 p.m. in New York, from $1.2605 on Nov. 14. The yen decreased 0.8 percent to 123.43 per euro from 122.39. The dollar traded at 97.09 yen, compared with 97.14.

Sterling rose 2 percent to $1.5027 and 1 percent to 84.58 pence per euro after its 14-day relative strength index versus the dollar dropped to 22.22 on Nov. 14, the lowest level in almost three weeks. A reading below 30 indicates a currency's decline is so fast that a reversal may be coming. The index increased to 30.37 today.

The pound depreciated to $1.4557 on Nov. 13, the lowest level since June 2002, and 86.63 pence per euro, the lowest since the 15-nation currency's 1999 debut, as Britain's economy fell into a recession.

The yen decreased 1 percent to 63.61 against the Aussie and 0.6 percent to 54.13 versus the New Zealand dollar today on bets investors will unwind at a slower pace trades in which they get funds in a country with low borrowing costs and buy assets where returns are higher.

Japan's 0.3 percent target lending rate compares with 5.25 percent in Australia and 6.5 percent in New Zealand. The Standard & Poor's 500 Index fell 0.3 percent after losing as much as 2.8 percent.

The yen has gained 13 percent versus the dollar, 31 percent against the euro and 50 percent against the Australian dollar in the past three months on speculation the global economic slump will deepen.


TradingEconomics.com, Bloomberg
11/17/2008 12:03:40 PM