The U.S. dollar declined for the sixth day in a row Wednesday, hitting a new record low against the euro, as investors continue to assume the U.S. interest-rate advantage over Europe will narrow when the Fed meets Sept. 18 to decide on the fed funds target rate. Analysts said a large fund was selling the dollar against a number of currencies, including the euro and the yen, in late Asian trade. "The fundamentals for the dollar remain poor because the Fed's the only major central bank that's likely to cut interest rates," RBC Capital Market's global currency head Adam Cole told Bloomberg. The dollar fell to $1.3861 per euro by 10:52 a.m., after hitting an all-time low of $1.3878 earlier in the day. The U.S. currency slid to 113.96 yen from 114.27 yen, as markets speculated Japanese investors may trim riskier overseas bond holdings. The dollar has lost 9% vs. the euro over the past year, including more than 4% in the past three months, as the ECB raised lending rates to 4% while the Fed left its rate unchanged. Interest rate futures foretell a 72% chance the Fed will drop its target rate by a half-point to 4.75% next week. The dollar's decline may slow after the meeting, according to Commerzbank's currency strategist Gavin Friend: "I don't think the pieces are all there for a concerted dive in the dollar. It might take a couple of months for data to confirm more easing is required beyond next week."
Sources: Bloomberg, AP
Commentary: Euro/Yen Strength To Continue Versus the U.S. Dollar • In Euros We Trust • Dollar Falls to Lowest in 15 Years
Stocks/ETFs to watch: UUP, UDN, FXE
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