- NEW YORK (Reuters)
- The dollar hit an all-time low against the euro on Wednesday, shrugging
off U.S. economic data as concerns about possible attacks in the United
States during New Year celebrations intensified selling pressure.
- A weekly jobless claims report showed new applications
for U.S. state jobless benefits hit the lowest level in nearly three years.
But the seemingly upbeat report of 339,000 new claims last week failed
to support the greenback.
- Currency traders are "routinely ignoring positive
information, choosing instead to highlight negative information as an excuse
to sell the dollar," said Michael Woolfolk, senior currency strategist
with the Bank of New York. He noted that the greenback's downward momentum
was accentuated by thin markets.
- The dollar's performance in recent months has become
effectively divorced from that of fairly robust U.S. economic reports because
the widening U.S. current account deficit -- the broadest measure of the
nation's global trade -- and low U.S. interest rates have punished the
- In addition, Tuesday's U.S. consumer confidence, manufacturing
and home sales figures fell short of expectations, though they still pointed
to recovery in the world's largest economy.
- As 2003 drew to a close, the U.S. government ordered
warplanes to patrol skies over New York, Las Vegas and other U.S. cities
during New Year's Eve celebrations as part of increased vigilance against
- Earlier this month, the U.S. terror alert status was
raised to the second-highest level due to heightened fear of attack, darkening
dollar sentiment that was already bleak.
- The dollar fell to record lows around $1.2647 per euro
(EUR=: Quote, Profile, Research) , according to Reuters data, bringing
its losses this year to more than 17 percent.
- It also hit its lowest level in six years against the
Australian dollar (AUD=: Quote, Profile, Research) and New Zealand dollar
(NZD=: Quote, Profile, Research) , and hit a 10-year low versus the Canadian
dollar (CAD=: Quote, Profile, Research) below C$1.2900.
- Against the yen, the dollar hovered just above recent
three-year lows(JPY=: Quote, Profile, Research) .
- In early New York trading, the euro (EUR=: Quote, Profile,
Research) was up 0.6 percent on the day to $1.2620. Against the yen (JPY=:
Quote, Profile, Research) , the dollar was virtually flat at 107.01 yen.
Against the Swiss franc (CHF=: Quote, Profile, Research) the dollar was
at 1.2336 francs, down 0.7 percent on the day. The pound (GBP=: Quote,
Profile, Research) rose 0.9 percent to $1.7923.
- The dollar's weakness is likely to draw market attention
to February's Florida meeting of finance ministers from the Group of Seven
(G7) industrialized nations as investors speculate how it will react to
the recent dollar fall.
- "Everybody is looking to the February meeting: that
seems to be the next major sticking point (for the dollar)" said Tim
Mazanec, senior currency strategist with Investors Bank & Trust in
- "At this point in time I would believe that if there
was anything (by way of currency market intervention to support the dollar),
the Europeans might come in by themselves," Mazanec added.
- On Tuesday, a G7 source told Reuters the group would
look at the weakened dollar during the Feb. 6 meeting.
- Ahead of the G7 talks, there is a bi-monthly meeting
among central bankers at the Bank for International Settlements in Basel
on Jan. 12.
- The G7 source also said European nations were becoming
increasingly concerned about the dollar's fall, adding that a level of
$1.30 per euro represented a "pain barrier."