Dollar falls as US industrial output dips
Sunday, 18 November 2007
NEW YORK, Nov 17 (AFP): The dollar weakened against the euro and the British pound yesterday in the wake of fresh economic news including a report that showed a surprise drop in US industrial production last month.
US industrial output fell 0.5 per cent in October, marking the biggest decline in production since January. Traders said the report weighed on the dollar as it raised concerns about US economic growth.
The euro, which has risen strongly against the dollar this year, climbed to 1.4659 dollars compared with 1.4609 dollars late Thursday. On Wednesday, the euro spiked above 1.47 dollars, flirting with its record high of 1.4752 dollars struck on November 9.
The pound rose to 2.0546 dollars compared with 2.0448 late Thursday.
In late US trade, the dollar stood at 1.1175 Swiss francs from 1.1222. The dollar surged to 111.07 yen, against 110.26 yen a day earlier.
The dollar, which has weakened considerably against the euro and other currencies this year, also came under pressure from a separate government report which revealed a lower-than-expected flow of international capital into the United States during September.
The US capital flow balance rebounded in September to a surplus of 26.4 billion dollars, compared with a deficit of over 70 billion dollars in the prior month, but September's reading fell short of market hopes which had anticipated inward flows of around 70 billion dollars.
Fed chairman Ben Bernanke has warned that US economic growth is likely to slow in coming months, amid a housing slump and rising energy prices, and concerns about interest rates have also weighed down the dollar.
Market chatter earlier this week suggesting the Fed could cut rates at a planned December 11 meeting had dented the dollar, although many economists expect the central bank to keep its key fed funds interest rate pegged at 4.50 per cent next month.
The dollar could come under further pressure from the Gulf states, where a group of six oil-rich countries, the Gulf Co- operation Council, looks set to unpeg their currencies from the US unit in the coming weeks, analysts said.
The euro meanwhile continued to strengthen against the pound, briefly hitting a new high of 0.7170 as currency speculators readjusted their expectations for interest rates in Britain and the eurozone.
US industrial output fell 0.5 per cent in October, marking the biggest decline in production since January. Traders said the report weighed on the dollar as it raised concerns about US economic growth.
The euro, which has risen strongly against the dollar this year, climbed to 1.4659 dollars compared with 1.4609 dollars late Thursday. On Wednesday, the euro spiked above 1.47 dollars, flirting with its record high of 1.4752 dollars struck on November 9.
The pound rose to 2.0546 dollars compared with 2.0448 late Thursday.
In late US trade, the dollar stood at 1.1175 Swiss francs from 1.1222. The dollar surged to 111.07 yen, against 110.26 yen a day earlier.
The dollar, which has weakened considerably against the euro and other currencies this year, also came under pressure from a separate government report which revealed a lower-than-expected flow of international capital into the United States during September.
The US capital flow balance rebounded in September to a surplus of 26.4 billion dollars, compared with a deficit of over 70 billion dollars in the prior month, but September's reading fell short of market hopes which had anticipated inward flows of around 70 billion dollars.
Fed chairman Ben Bernanke has warned that US economic growth is likely to slow in coming months, amid a housing slump and rising energy prices, and concerns about interest rates have also weighed down the dollar.
Market chatter earlier this week suggesting the Fed could cut rates at a planned December 11 meeting had dented the dollar, although many economists expect the central bank to keep its key fed funds interest rate pegged at 4.50 per cent next month.
The dollar could come under further pressure from the Gulf states, where a group of six oil-rich countries, the Gulf Co- operation Council, looks set to unpeg their currencies from the US unit in the coming weeks, analysts said.
The euro meanwhile continued to strengthen against the pound, briefly hitting a new high of 0.7170 as currency speculators readjusted their expectations for interest rates in Britain and the eurozone.