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Dollar Extends Losses vs Euro on Bomb Threat Report

Reuters
Wednesday, 22 Aug 2007 | 1:54 PM ET

The dollar extended losses against the euro on Wednesday after a news report about a bomb threat in upstate New York.

The euro rose from around $1.3523, before trading back down again.

Traders also said technical factors also helped push the euro higher, with stops above and slightly below $1.3550.

A bomb threat briefly closed the New York State Thruway near the state capital Albany on Wednesday but the highway was soon reopened, state police said.

Police closed the service area of the Guilderland toll booth about 150 miles north of New York City.

The yen extended losses earlier on Wednesday after the European Central Bank said it intended to add 40 billion euros to the banking system to boost liquidity and steady financial markets.

The planned ECB cash injection should further ease tight liquidity conditions, making investors more comfortable with putting on risky carry trades, a strategy that involves selling the low-yielding yen to invest in assets with higher returns.

Higher U.S. stocks and a test of key technical resistance in the euro against the yen also accelerated the Japanese currency's decline, analysts said.

The ECB on Wednesday said it will hold a tender to add 40 billion euros in 91-day funds to the euro money market on Thursday.

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