Dollar falls against euro

Published January 18, 2009

NEW YORK, Jan 17: The US dollar fell against the euro Friday amid a series of weak economic data and after an assurance from the head of the European Central Bank that eurozone interest rates would not dip to zero.

The euro rose to $1.3264 at 2200 from $1.3121 late Thursday in New York.

The dollar firmed to 90.67 yen from 89.86 yen on Thursday.

The greenback was dampened by official data showed Friday that consumer prices were continuing to fall, foreign demand of dollar denominated investments was the weakest since September 2007 and industrial production was down for the fourth time in five months.

The triple play of negative US data ... fed into the US dollar selloff from overnight, said Michael Woolfolk of the Bank of New York Mellon.

But he added that financial markets were poised for another bout of selling and the confluence of lower rates and weaker economic data outside the US is expected to bolster the dollar on safe-haven risk aversion similar to what was seen in October.ECB president Jean-Claude Trichet said Thursday the bank might have room to reduce borrowing costs even further, boosting the single European currency.

But in an interview aired Friday by Japanese broadcaster NHK, Trichet added: If you ask me the question, ‘will you go to zero?’ I would say ‘no we won’t. Boris Schlossberg, director of currency research at Global Forex Trading, said the euro could continue to face pressure amid economic problems in Europe.

The persistently weak trade data underscores the challenges facing the Eurozone this year, he said.

The eurozone nations saw their trade balance with the rest the world slide deep into deficit in November, according to worse-than-expected EU figures released Friday.

The eurozone chalked up a trade deficit of 7.0 billion euros ($9.2 billion) in November, compared with a revised surplus of 500 million euros in October, the EU’s Eurostat statistics agency said in a first estimate.

The 16-member union remains heavily dependent on exports for its economic growth and the toxic combination of global recession and persistently high exchange rates bodes badly for the region in 2009, Schlossberg said.—AFP

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