NEW YORK -- The euro hit a fresh all-time high of $1.2325 Monday, as the euphoria surrounding the capture of former Iraqi leader Saddam Hussein over the weekend quickly wore off.
The 12-nation currency beat its previous record of $1.2297, set Friday, as it continued its climb that has taken it nearly 17 percent higher against the U.S. currency this year.
The dollar rebounded briefly to $1.2130 against the euro in early trading before plummeting later in the day. In late New York trading, the euro was quoted at $1.2299.
"The dollar was up briefly after the capture of Saddam but the markets realized this would not really change anything," said David Solin, partner at Foreign Exchange Analytics, an Essex, Conn.-based research firm. "There is a fear that the insurgency will actually increase in the near-term."
The dollar's slide has gained momentum amid lower end-of-year trading volumes that magnify foreign exchange swings and the spreading view that underlying economic conditions can only send the dollar down. The dollar has recently hit multiyear lows against the Japanese yen and the British pound.
"This is typical of the pattern we've seen," said Daniel Katzive, foreign exchange strategist at UBS in Stamford, Conn. "The dollar moves up briefly when we get some good news and then it slows down. It is part of the ongoing adjustment of the dollar."
A ballooning U.S. trade deficit remains the primary drain on the dollar, with the U.S. budget deficit providing a further drag, traders said.
"The fundamentals haven't changed and there is downward pressure on the dollar," said Noralyn Marshall, senior international economist at Maria Fiorini Ramirez Inc., a New York-based economics advisory firm. "The fundamentals haven't changed and there is downward pressure on the dollar."
Katzive said that at a time when interest rates remain low in the U.S., foreigners remain net sellers of U.S. equities. "Foreign demand for U.S. equities remains lackluster, adding further downward pressure on the dollar."
Peter Morici, professor of international business at the University of Maryland, blamed the record trade deficit with China and that nation's resistance to letting the yuan trade freely against others world currencies.
"Until the Europeans and the U.S. formulate a joint strategy to unpeg the (Chinese) yuan substantially - about 40 percent because it has been pegged for so long that it is grossly out of adjustment - the situation will not change," he said.
In late New York trading, the dollar was quoted at 107.52 yen, down from 107.68 yen late Friday.
Against other currencies, the dollar was quoted at 1.2618 Swiss francs, up from 1.2605, and 1.3138 Canadian dollars, down from 1.3157. The British pound fell to $1.7461 from $1.7476.
© 2017. All Rights Reserved. | Contact Us