US Dollar Hits Record Low Against Euro By TALI ARBEL,AP Posted: 2007-09-28 18:06:42 NEW YORK (AP) - The dollar fell to a record low against the euro for the seventh consecutive session while the Canadian dollar hit a 31-year high as inflation data raised expectations that the Federal Reserve Bank would again lower interest rates. The 13-nation European currency reached $1.4274 in late New York trading - exceeding its previous peak of $1.4189, reached Thursday. The euro had bought $1.4160 in New York late Thursday. The euro spiked above $1.42 after the release of data showing that a key measure of inflation in the U.S. eased last month to the slowest pace in 3 1/2 years. The inflation data boosted hopes that the Fed would cut interest rates despite surprisingly positive consumer spending data. The 1.8-percent rise in core inflation over the past year, which excluded energy and food, was within the Fed's comfort zone for core price increases of between 1 percent and 2 percent, meaning they could cut again. Although the Commerce Department reported Friday that incomes rose 0.3 percent last month, slightly less than had been expected, economic data was mostly positive. Consumer spending rose by 0.6 percent in August, and construction spending increased 0.2 percent - both numbers higher than anticipated because of the market's recession fears swarming throughout August. "Both personal income and spending are up," said Michael Woolfolk, senior currency strategist at the Bank of New York. "The consumer was undaunted by financial market turmoil." Meanwhile, the Canadian dollar hit a 31-year high Friday, buying $1.0091 in U.S. currency. It later retreated to 99.37 U.S. cents in late New York trading. The loonie bought 99.87 U.S. cents late Thursday. That country's currency - named for a Canadian bird, the loon, on the one-dollar coin, has been on a spectacular tear since the U.S. greenback began to weaken in the face of a credit crisis sparked by the U.S. subprime mortgage market. The loonie reached parity with its U.S. counterpart for the first time in 31 years on Sept. 20. Just five years ago, in January 2002, the loonie hit a record low of 61.79 US cents. Helping the Canadian dollar's rise was a Statistics Canada report that the economy grew by 0.2 percent in July, the same rate as in June. The price of oil surged above C$83 (US$83.48) a barrel on Friday, closing in on its record high. Soaring oil and gas prices have bolstered Canada's economy and currency, leading the loonie to be dubbed the petrocurrency. In other trading, the British pound rose to $2.0454 from $2.0270 in New York late Thursday. The dollar was down to 114.74 Japanese yen from 115.59 yen and 1.1635 Swiss francs from 1.1724. The dollar has been sliding since the Fed cut interest rates last week by a larger-than-expected half percentage point. Since then, a week of mostly disappointing U.S. economic data have stoked expectations that another rate cut could follow. "With the market expecting lower rates, this continues to undermine the U.S. dollar, especially with the European Central Bank perhaps set to raise interest rates," said Woolfolk. If September employment data expected for next week is positive and the ECB does not raise rates, he said, that could help arrest the dollar's fall in the short term. The lower U.S. interest rates, used to jump-start the economy, can weaken its currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns. Longer term, the U.S. has been running large trade and budget deficits for years - factors that tend to undermine a country's currency in the long term, unless they are offset by foreigners willingness to invest their money in the United States. Consequences of the dollar's fall include upward pressure on inflation from higher prices for imported food and goods, and less purchasing power for Americans traveling or living abroad. On the other hand, a cheaper dollar makes U.S. exporters' wares more competitive on a price basis overseas. Oil is more expensive and the value of a U.S. dollar is dropping, damn everything's just probably gonna be more expensive later on.
Ooohhh...good time to go to USA....but bad time to go to uk then...=/ too bad....i dont have money to go to usa... a ticket to uk is very cheap...but....once i think of the exchange rate....i suddenly feel poor....
^nah, I prefer to spend my euros for the HK dollars; can spend even more there. (but still jealous on the peeps with the British Pounds lol)
