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The currency market is not optimistic about another Bush term
(Agencies) |
The dollar fell to a record low against the euro on Friday, with
analysts forecasting more declines to come.
Meanwhile, oil prices moved in the opposite direction, with a barrel of
US light crude ending up 79 cents to $49.70 on fresh Iraqi security
concerns.
With the US forces stepping up the pressure on Iraqi rebels in Falluja,
Brent crude also finished up in London, gaining 41 cents to close on
$46.42.
Analysts believe the US will try to keep the dollar weak to boost
exports.
They point to America's giant trade deficit.
The US currency dropped as low as $1.2962 against the euro on Friday.
The fall came despite positive jobs data from the US Labor Office on
Friday, showing that 337,000 new positions were created in the US in
October - double Wall Street's expectations.
"What this (the dollar's fall) shows is that the
structural problems in the US economy are completely dominating the
positive cyclical
news that
we had today from payrolls [unemployment figures]," said Aziz McMahon, a
strategist at ABN Amro in London.
"It seems now that the longer-term investors like
pension funds and
perhaps monetary authorities are either hedging their dollar risk or
moving assets out of the United States.
"It looks like the dollar has further to fall," Mr McMahon said.
Richard Franulovich of Westpac Banking said Friday's dollar fall was
"nothing short of stunning".
"This is a pretty good guide at just how entrenched negative sentiment
is toward the dollar," he said.
In Europe the dollar's decline, and in turn - the euro's rise - raised
fears that it will hit European exports.
The euro is now 57% above its all-time low against the dollar of 82
cents from October, 2000.
French President Jacques Chirac said he was "a little bit worried about
the weakness of the dollar".
Speaking at a summit of European leaders in Brussels he hinted that the
European Union should take action.
"This should provoke certain reactions on our part," he
said.
(Agencies) | 
Updated: 2004-11-08 14:48