Tuesday August 12, 2008 - 11:53:22 GMT
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Reuters - www.reuters.com
FOREX NEWS-Dlr hits six-month high, commodities boost
* Dollar index .DXY surges to 6-month high, up for 8th day
* Euro under pressure as economic worries deepen
* Dollar seen well-positioned as rest of world slows
(changes byline, adds quotes, updates prices)
By Simon Falush
LONDON, Aug 12 (Reuters) - The dollar hit a six-month high
against a basket of major currencies on Tuesday, benefiting from
weakness in commodities, as investors looked beyond U.S. growth
worries to a slowing global economy.
The euro slid to a six-month low against the dollar, while
the pound slipped below $1.90 to a 21-month trough, as fears
grew that economic malaise in the United States is leading to a
broader global slowdown.
The euro has seen a sustained fall since European Central
Bank President Jean-Claude Trichet said last week the euro zone
economy was slowing more than policymakers had expected.
It has broken a series of key chart levels, convincing some
analysts that the dollar may be ending its seven-year slide.
Inflation hedges oil and gold fell, with crude below $114 a
barrel CLc1, while bullion hit its lowest in eight months
"As long as we see commodity prices moving lower ... we
still see downside in euro/dollar medium to long term," said
Michael Klawitter, currency strategist at Dresdner Kleinwort in
However he said there was potential for short-term recovery
in the euro given technical positioning, and that it should be
supported for now at around these levels.
"The move in favour of the dollar over the last week has
pretty much come to an end, and with the market being clearly
overbought dollar and oversold euro/dollar and so on, I think
the risk of technical bounces (for the euro )is significant."
By 1053 GMT, the euro was down 0.1 percent on the day at
$1.4890 <EUR=> after touching a six-month low of $1.4812,
according to Reuters data.
The dollar index .DXY, which measures the U.S. unit
against a basket of six currencies, rose 0.2 percent to 76.362,
having hit a six-month high of 76.616.
The index rose for the eighth straight trading day and over
that time has surged more than four percent -- on track for its
biggest such winning streak in 13 years.
The dollar was steady at 110.13 yen <JPY=>, within striking
distance of a seven-month peak of 110.40 hit on EBS the previous
day, while the euro was steady at 164.05 <EURJPY=>.
The pound fell to a 21-month trough against the dollar of
$1.8970 before recovering slightly to trade at $1.9012 <GBP=>.
The U.S. economy is still ailing with the financial sector
reeling from a year-old credit crisis, but analysts say the
outlook elsewhere in the world has buoyed its position.
The euro area and Britain have buckled under the twin
strains of higher inflation and fading growth.
However there are still risks for the dollar from U.S. data
if it comes in much weaker than expected, with analysts looking
to U.S. trade blance data at 1230 GMT for more signs of strain.
"The release could highlight concerns that if the one area
of growth for the U.S. economy begins to weaken and the slack
isn't taken up domestically, the economy may sink further, which
could weigh on the dollar today," said Forex Capital Markets in
a note to clients.
Tumbling commodity prices hit the high-yielding Australian
dollar, which sank to a seven-month low against the U.S. dollar
<AUD=>, also weighed by expectations of lower interest rates. On
Monday the Reserve Bank of Australia said the economy seemed to
be slowing enough to reduce inflation significantly over time.
Adding to the case for a cut in Australian rates, a key
measure of business conditions struck its lowest level in seven
years in July as firms reported falling sales and profitability.
(For details please double click on [ID:nSYU004913])
The Aussie dropped 0.7 percent to $0.8734 <AUD=> after
falling as low as $0.8705, its weakest since January.
(Reporting by Simon Falush)
(Editing by Gerrard Raven)
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