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Euro below $1.40 for first time in six months

Euro below $1.40 for first time in six months

The euro broke below $1.40 Thursday for the first time in six months as investors in search of safety bought up the dollar after disappointing economic reports.
Ongoing worries about public finances in the eurozone brightened the dollar's shine.
The dollar has tended to benefit on uncertainty since the financial crisis in fall 2008. Weaker-than-expected economic data in the U.S., shake-ups in financial regulation and fears of default on European government debt helped drive the greenback higher Thursday, continuing its gains over the past two months.
The 16-nation euro fell as low as $1.3938, its weakest level since July 2009. In later trading Thursday morning in New York, it fetched $1.3956 compared to $1.4038 late Wednesday.
The British pound dropped to $1.6145 from $1.6179, and the dollar gained to 90.02 Japanese yen from 89.90 yen late Wednesday.
On Thursday, the government said orders to U.S. factories for big-ticket manufactured goods rose a meager 0.3 percent in December, while a drop in the number of newly unemployed people filing for jobless benefits was short of expectations.
That compounded the uncertainty over the recovery in the U.S. economy.
Meanwhile, the Federal Reserve on Wednesday elected to hold interest rates at their very low range near zero. But it said economic activity "continues to strengthen" and made no changes in its plans to wind down emergency support for the mortgage market. One Fed member also voted against the Fed's plege to keep rates at record lows for an "extended period."
"The upgraded outlook, the single vote to revoke the 'extended period' mantra, and the continued planning to unwind credit easing are all important steps toward tightening," said UBS currency analyst Geoffrey Yu.
Low interest rates can weigh on a currency as investors transfer funds to where they could earn higher returns. The U.S. has one of the lowest official interest rates of the major economies. Many emerging-market countries have substantially higher rates.
UBS is selling the euro against the dollar, seeing a value of $1.35, as concerns over Greece's public finances continue. Greece's problems are causing rising anxiety, seen in the bond markets, about the indebtedness of other European countries, such as Portugal.


Updated : 2021-01-26 22:43 GMT+08:00