Thursday October 15, 12:50 PM
Dollar falls to 14-month euro low
LONDON (AFP) - The dollar hit a 14-month low against the euro Thursday on fears that US interest rates would remain super-low for a long time and as a stock market rally sparked appetite for riskier assets, traders said.
At 0615 GMT, the European single currency reached 1.4968 dollars, the highest level since August 2008. The euro later pulled back to 1.4935, up from 1.4922 dollars late in New York on Wednesday.
Against the Japanese currency, the dollar firmed to 89.65 yen from 89.40 yen on Wednesday.
Minutes from the US Federal Reserve's most recent interest rate meeting indicated that US borrowing costs would likely remain low for some considerable time, according to analysts.
Minutes from the September 22-23 meeting published on Wednesday showed Fed officials see a recovery underway from recession but one "restrained" by high unemployment and difficult credit.
"The US dollar remains flat on its back and has all the hallmarks of a patient ready for open heart surgery," said MF Global analyst Manus Cranny.
"No strong dollar rhetoric coming from the Fed minutes ... makes clear that rates are not rising any time soon in the United States."
The Fed voted unanimously at the meeting to maintain the federal funds rate of zero to 0.25 percent in place since last December to help jolt the economy out of its worst recession in decades. Investors generally prefer currencies offering higher yields.
Currency markets also took their cue from strong gains in US stocks in response to positive corporate earnings results that encouraged investors to pour money into assets seen as likely to perform well as the global economy recovers.
The Dow Jones passed the symbolic 10,000 level on Wednesday for the first time since October last year when markets were in freefall after the collapse of US investment giant Lehman Brothers (NYSE: LEH - news) .
"The dollar remains under broad pressure with investors emboldened to add to risk positions on solid company earnings" and expectations US interest rates will remain low, said Societe Generale (Paris: FR0000130809 - news) analyst Patrick Bennett.
Market optimism was fuelled by better-than-expected earnings results from investment bank JPMorgan Chase as well as strong Chinese trade data.
Investors were waiting for another slew of earnings news later Thursday from US corporate giants Citigroup (NYSE: C - news) , Goldman Sachs (NYSE: GS - news) and Google (NASDAQ: GOOG - news) .
This week meanwhile has also seen gold touch a series of record peaks as the weak greenback makes the precious metal cheaper for investors holding other currencies, thereby boosting demand and prices, traders said.
In London on Thursday, the euro was changing hands at 1.4935 dollars against 1.4922 dollars late on Wednesday, at 133.70 yen (133.41), 0.9260 pounds (0.9340) and 1.5136 Swiss francs (1.5147).
The dollar stood at 89.65 yen (89.40) and 1.0127 Swiss francs (1.0149).
The pound was at 1.6197 dollars (1.5974).
On the London Bullion Market, the price of gold fell to 1,057 dollars an ounce from 1,059.50 dollars an ounce late on Wednesday.
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