Tags: Dollar

Euro Falls Against Dollar On China, Europe Worries

Friday, 12 Feb 2010 04:40 PM

The dollar rally continued on Friday.

The dollar rose to a 9-month high against the euro as worries about bank lending curbs in China and European debt woes drove investors to safe havens like the dollar.

In late afternoon trading in New York, the euro fell to $1.3612 from $1.3686 late Thursday. Earlier in the day, it dropped as low as $1.3533, its weakest point since May 2009. The euro is now well off its recent high level of $1.51 reached last November.

The British pound slipped to $1.5669 from $1.5697, and the dollar rose to 89.96 Japanese yen from 89.74 yen.

China told its banks to build more reserves and cut back on lending for the second time in a month. That raised fears that growth would slow in China, which could hurt companies that export and do business there.

Meanwhile European economic data deepened worries about the region's ability to deal with swelling budget deficits in Greece and other weak economies in the region. On Friday, the European Union said countries that use the euro grew a meager 0.1 percent in the fourth quarter, while Germany didn't grow at all. Germany is the continent's biggest economy.

That followed Thursday's pledge from Europe to help Greece with its debt crisis. Despite offering few details of how a bailout might work, the move raised confidence that instability would be contained. Still, the lack of a concrete plan left currency traders wary.

Michael Hewson of CMC Markets in London wrote in a research note that the lack of growth out of Europe "refocused the market's attention on sovereign debt."

Bob Sinche, chief strategist at Lily Pond Capital Management and the former head of foreign exchange at Bank of America, believes the euro has further to fall. The U.S. economy is growing faster and the Federal Reserve is likelier to raise interest rates before the European Central Bank, he said.

In other trading, the dollar rose to 1.0509 Canadian dollars from 1.0497 Canadian dollars, and climbed to 1.0773 Swiss francs from 1.0707 francs.

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The dollar rally continued on Friday.The dollar rose to a 9-month high against the euro as worries about bank lending curbs in China and European debt woes drove investors to safe havens like the dollar.In late afternoon trading in New York, the euro fell to $1.3612 from...
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2010-40-12
 

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