AFP: Dollar's rise against euro a timely boost for exporters
The dollar rose from a 14-month low against the euro yesterday as falling stock and commodity prices prompted investors to lock in recent gains in other currencies.
The greenback advanced against the euro after earlier falling to the lowest level since August 2008, in a move which may signal some relief to Irish exporters aiming at the giant US market. Any rise in the value of the dollar will make Irish exports to the US cheaper for American consumers, helping to lift demand.
Commodity prices from copper to coffee and oil fell as the dollar rebounded, diminishing the appeal of many commodities. Some traders buy copper and other raw materials when the dollar weakens, to preserve purchasing power. For instance, last week, copper rose 6.6pc as the dollar index slid to its 14-month low.
On foreign exchange markets, the euro fell about 1pc to session lows at $1.4857 after hitting a 14-month high at $1.5064. The ICE Futures dollar index, a gauge of the greenback's performance against six other major currencies, was up 0.71pc at 76.003.
It was a turnaround for the dollar, which struggled earlier, partly due to a report saying China should increase its holdings of euro and yen in its foreign reserves.
Investors were reluctant to push the euro higher given the huge amount of sell orders on the dollar, which suggests a near-term recovery in the US currency is on the horizon.
Tumbling
US stocks fell with financial shares tumbling on speculation a federal tax credit for home buyers would expire, while oil prices also traded lower.
"At some point, the euro will fall victim to its own success," said Vassili Serebriakov, a currency strategist at Wells Fargo and Co in New York. "We've seen the euro touching new highs, but really struggling to extend them significantly."
"It's primarily a lot of profit-taking on long-risk positions and some hesitation on the part of market participants ahead of the US gross domestic product number that's going to come out this week," one trader said.
Against the yen, the dollar was flat at 92.04, retreating from a high of 92.29 hit on EBS earlier, the highest level in about one month.
