Monday, August 25, 2008

Dollar on 6 Month High

Hard to tell. The dollar traded near a six-month against the euro on speculation a 20 percent drop in crude oil prices from its record high will support economic growth of the world's largest energy consumer.

Crude oil for October delivery fell the most in more than three years on Aug. 22. The euro fell against the yen before a survey tomorrow forecast to show business confidence in Germany dropped to the lowest level since 2005.

`The decline of oil prices took some pressure off the dollar,' said David Watt, senior currency strategist in Toronto at RBC Capital Markets Inc., a unit of Canada's biggest bank by assets. `The dollar bull market is in place.'

The dollar traded at $1.4795 per euro at 8:45 a.m. in New York, compared with $1.4793 on Aug. 22. The U.S. currency fell 0.4 percent to 109.62 yen, from 110.07 at the end of last week. The euro declined 0.4 percent to 162.20 yen, from 162.83.

Crude oil has fallen almost 20 percent since reaching the all-time high of $147.27 on July 11. It tumbled 5.4 percent on Aug. 22, the biggest drop since December 2004. Crude oil for October delivery rose 0.5 percent today to $115.37 a barrel in New York after touching $114.03, the lowest since Aug. 20. The euro-dollar exchange rate and oil have had a correlation of 0.9 in the past year, according to Bloomberg calculations. A reading of 1 would mean they moved in lockstep.

No comments: