NEW YORK, Jan 05, 2004 (AP WorldStream via COMTEX) -- The dollar sank to new depths against the euro and slipped to its worst level in 11 years against the British pound Monday after a Federal Reserve official said the risk of a dollar crisis was "quite low."
U.S. policy-makers have indicated little interest in talking up the dollar, and the comment over the weekend by Federal Reserve governor Ben Bernanke seemed to indicate that the government would not intervene to prop up the sliding greenback.
"This was the latest selling excuse," said David Gilmore, partner at Essex, Connecticut-based Foreign Exchange Analytics. "For markets making money selling the dollar, it remains a good reason for remaining in that mode."
Europe's 12-nation currency reached $1.2681 in midday trading in New York. The British pound hit $1.8072, the first time the pound rose above $1.80 since September 1992.
The dollar, weighed down by worries over the U.S. trade deficit and the surging budget deficit, has dropped about 5 percent against the euro in the past month. Lower U.S. interest rates compared to those in Europe and fear of terrorist attacks have also contributed to the euro's rise.
But some expect that a dollar rebound after weak year-end trading will help strengthen the U.S. currency.
"What we saw over the holidays was to be expected," said Christoph Mueller of Germany's DZ Bank. "But I expect that there will be a sharp correction in the future."
William Dudley, chief U.S. economist at Goldman Sachs in New York, said what comes out of the G-7 meeting in early February will be important in setting the tone for the currency markets.
"Our forecast for the dollar is 1.30 against the euro - which isn't that far away," he said.
A 1.30 Euro would likely mean at least a $.81-.82 CDN to US$ Charlie?
I have seen $.83 by the end of 04... what are AAFRD projecting Charlie?
U.S. policy-makers have indicated little interest in talking up the dollar, and the comment over the weekend by Federal Reserve governor Ben Bernanke seemed to indicate that the government would not intervene to prop up the sliding greenback.
"This was the latest selling excuse," said David Gilmore, partner at Essex, Connecticut-based Foreign Exchange Analytics. "For markets making money selling the dollar, it remains a good reason for remaining in that mode."
Europe's 12-nation currency reached $1.2681 in midday trading in New York. The British pound hit $1.8072, the first time the pound rose above $1.80 since September 1992.
The dollar, weighed down by worries over the U.S. trade deficit and the surging budget deficit, has dropped about 5 percent against the euro in the past month. Lower U.S. interest rates compared to those in Europe and fear of terrorist attacks have also contributed to the euro's rise.
But some expect that a dollar rebound after weak year-end trading will help strengthen the U.S. currency.
"What we saw over the holidays was to be expected," said Christoph Mueller of Germany's DZ Bank. "But I expect that there will be a sharp correction in the future."
William Dudley, chief U.S. economist at Goldman Sachs in New York, said what comes out of the G-7 meeting in early February will be important in setting the tone for the currency markets.
"Our forecast for the dollar is 1.30 against the euro - which isn't that far away," he said.
A 1.30 Euro would likely mean at least a $.81-.82 CDN to US$ Charlie?
I have seen $.83 by the end of 04... what are AAFRD projecting Charlie?