WSJ: UPDATE: Dollar Sinks Sharply Against Euro, Yen, Swiss Franc
LONDON (Dow Jones)--The dollar has sunk to fresh lows against a range of other major currencies, including the euro, yen and Swiss franc, during thin trading conditions.
The euro has smashed through to a new 2009 high at nearly $1.51, while the dollar has tumbled below parity against the Swiss franc for the first time in 19 months.
Earlier in the session, the dollar lurched lower against the yen, as sellers of the Japanese currency capitulated on stale bets. The dollar hit a 10-month low of Y87.55.
The Dollar Index, which tracks the dollar's value against a trade-weighted basket of six major currencies, sank to a 15-month low of 74.399.
Late Monday, the U.S. Federal Reserve set the tone for this fresh bout of dollar weakness. The minutes revealed that the Fed is not yet close to withdrawing economic stimulus. The minutes also said that the likelihood of a disorderly dollar decline was "relatively low"--a sign that it is comfortable with the current pace of dollar weakness.
Still, as there was nothing particularly new in those comments, it appears to have been the slump in the dollar against the yen, which came earlier in the trading session, that sparked the dollar's broader tumble.
That decline makes it even more attractive for traders to sell the dollar, rather than the yen, in seeking higher returns elsewhere.
"For carry traders, the dollar is an even more attractive funding currency," said Lutz Karpowitz, a currencies analyst at Commerzbank in Frankfurt.
Karpowitz added that trading volumes are somewhat weaker than usual due to the U.S. Thanksgiving holiday Thursday--a development that seems to have amplified market movements.
"It will be interesting now to see how the euro-dollar rate reacts to the data this afternoon," he added.
Key data releases later Wednesday include U.S. weekly jobless claims, October durable goods orders, and personal income figures, all due at 1330 GMT. The University of Michigan consumer confidence index is due at 1455 GMT.
At 1215 GMT, the euro was trading at $1.5069. The dollar was at Y87.73 against the yen and at CHF1.0016 against the Swiss franc.
