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Dollar at Record Low Against the Euro

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#1    Lottie


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Posted 05 November 2004 - 09:59 PM

The dollar fell to a record low against the euro on Friday, with analysts forecasting more declines to come.  

Meanwhile, oil prices moved in the opposite direction, with a barrel of US light crude ending up 79 cents to $49.70 on fresh Iraqi security concerns.

With the US forces stepping up the pressure on Iraqi rebels in Falluja, Brent crude also finished up in London, gaining 41 cents to close on $46.42.

Analysts believe the US will keep the dollar weak to add exports.

Some also said the large size of the US budget deficit could drive down the dollar even further.  

Brushed off

The drop in the dollar came despite positive jobs data from the US Labor Office on Friday.  

"What this shows is that the structural problems in the US economy are completely dominating the positive cyclical news that we had today from payrolls [unemployment figures]," said Aziz McMahon, a strategist at ABN Amro in London.  

"It seems now that the longer-term investors like pension funds and perhaps monetary authorities are either hedging their dollar risk or moving assets out of the United States.  

"It looks like the dollar has further to fall," Mr McMahon said.

The US currency dropped as low as $1.2962 against the euro on Friday.

"The price action today is nothing short of stunning," said Richard Franulovich of Westpac Banking. "This is a pretty good guide at just how entrenched negative sentiment is toward the dollar."



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