The US dollar fell to a three-year low against major currencies on Monday, and expectations the Federal Reserve will keep monetary policy loose even as interest rates are rising elsewhere raised the prospect of further weakening. The euro climbed to a 17-month high above $1.49 after surprisingly strong manufacturing data bolstered chances that interest rates in the eurozone will rise further. Traders said a break of $1.50 is just a matter of time.
Data showed US manufacturing expanded at a brisker pace than expected in April, although growth slowed from the prior month, while prices of raw materials hit near three-year highs. Another report showed construction spending rose at its fastest pace in 11 months in March.
"The reaction should reaffirm how difficult it is for the US dollar to get a sustained lift from strong growth and price numbers until such data starts to significantly pull forward US rate expectations," said Alan Ruskin, global head of G10 currency strategy at Deutsche Bank in New York. The US dollar index, which measures the greenback versus a basket of currencies, hit a three-year low of 72.722, edging closer to the record low of 70.698 set in March 2008.
The euro rose 0.5 percent to $1.4876, after earlier rising as high as $1.4902 on Reuters data. Traders cited demand from a UK bank and European sovereign names but added that flows were scarce due to market holidays in parts of Asia and in Britain. Against the yen, the dollar was flat at 81.22 yen while the Australian dollar hit a new post-float high above $1.10 before easing to $1.0967. A sharp fall in silver prompted some profit-taking in the Aussie and other high-flying commodity currencies, including the Canadian dollar, which pulled back from a 3-1/2-year high versus it US counterpart.
Comments
Comments are closed for this article.