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Dollar Falls to Near-Record Lows Against Euro

AP
Monday, 10 Sep 2007 | 5:05 PM ET

The dollar fell near record lows Monday against the euro, weighed down by last week's disappointing U.S. jobs data and chances that an interest rate cut by the Federal Reserve is on the way.

The euro traded as high as $1.3816 before slipping back to $1.3808 in late New York trading.

That was still above the $1.3768 it bought in New York late Friday, and not far short of the 13-nation currency's all-time high of $1.3852, reached in July.

The British pound rose as high as $2.0329 before dropping down to $2.0279, unchanged from Friday. However, the dollar fell to 112.58 yen before rebounding to 113.56 yen, close to Friday's 113.34 yen, after Japan revised downward its second-quarter gross domestic product figures.

The dollar dropped sharply against all three currencies on Friday after the U.S. Labor Department reported that employers sliced payrolls by 4,000 in August _ dashing economists' predictions that payrolls would grow by 110,000. It was the first decline in four years.

"The dollar has failed to post any kind of recovery against the major currencies off the back of Friday's shock payroll data and the longer-term focus remains squarely on whether the Fed will now cut rates at next week's ... meeting," said David Jones, chief market analyst at CMC Markets.

Speeches from Fed officials Monday attempted to allay investors' fears of a weakening economy. Officials refrained from hinting at how the central bank might alter rates on or before its Sept. 18 meeting, prompting speculation on the presupposed rate cut. A cut from the current rate, 5.25 percent, would be the first reduction in four years.

Lower interest rates, used to jump-start the economy, can weaken a currency by giving investors lower returns on investments denominated in it.

The Fed also released a report Monday detailing consumers' continued reliance on credit cards as a replacement for harder-to-get home equity loans in the current credit crunch.

The Federal Reserve reported that consumer credit rose at an annual rate of 3.7 percent in July, down from a 5.9 percent growth rate for consumer debt in June.

In other trading, the dollar bought 1.1865 Swiss francs, down from 1.1879 late Friday, and 1.0525 Canadian dollars, down from 1.0554.