DJ WORLD FOREX

Fri Jul 16 15:56:00 EDT 2010

Dollar Falls To Seven-Month Low On

Growth Worries
By Bradley Davis
Of DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--The dollar fell Friday to its lowest level since December against the
yen, as disappointing economic news cast further doubt on the pace of the U.S. recovery.
The euro rose above $1.30 to a two-month high as concerns over the euro-zone sovereign debt
crisis continued to fade with successful auctions this week of Portuguese and Spanish
government debt.
The doom-and-gloom associated with the sovereign debt crisis turning into a larger financial
catastrophe has given way to concern about global growth, said Barclays analysts.
Late Friday, the euro was at $1.2927, up from $1.2900 late Thursday, according to EBS via CQG
after ticking as high as $1.3008. The common currency gave back some of its gains as U.S.
stocks sank deep into the red, losing more than 2.6%. The dollar was at Y86.61, down from
Y87.46, while the euro was at Y111.95, below Y112.81. The U.K. pound was at $1.5298, down
from $1.5412. The U.S. dollar was at CHF1.0519, up from CHF1.0439.
The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies,
was at 82.535, off from 82.555 late Thursday.
Disappointing U.S. data, including Friday's worse-than-expected consumer sentiment figures,
illustrate the threat of global economies lurching into a "double-dip" recession, said Roberto
Mialich, foreign-exchange strategist at Unicredit MIB in Milan, noting his firm did not share
such a pessimistic view of the global recovery.
That worry caused investors to unwind their bets on higher-yielding currencies, such as the
Australian dollar, which had been funded with low-cost yen and dollars, Mialich said. As a
result, the growth-positive Australian and Canadian dollars dropped by more than 1.4% against
the greenback.
The dollar dropped to Y86.27, a seven-month low, on the heels of disappointing data indicating
U.S. consumer-sentiment levels fell in mid-July to levels last seen in March 2009.
The euro gained about 2.5% on the week against the dollar, even though the common currency
came off its two-month high. The euro has marched steadily higher from $1.1876, the four-year
low it hit in early June.
"It sure looks like they did a really good job on implementing a strategy to prevent the demise of
the euro," said Phil Streible, senior market strategist at Lind-Waldock in Chicago, of European
officials' plan to shore up debt-ridden countries, such as Spain and Portugal.
As long as auctions of government debt from euro-zone countries continue to go well, such as
the successful auctions this week of Portuguese and Spanish debt, the common currency should
keep marching higher, Streible said.

Disclaimer
(This article is general financial information, not personalized investment advice, as it does not
consider the unique circumstances affecting an individual reader's decision to buy or sell a
specific security. Dow Jones does not warrant the accuracy, completeness or timeliness of the
information in this article, and any errors will not be made the basis for any claim against Dow
Jones. The author does not invest in the instruments or markets cited in this article.)