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Euro sinks below $1.40, first time in 6 months

Euro sinks below $1.40, first time in 6 months

The euro fell below $1.40 Thursday for the first time in six months as risk-averse investors parked money in dollars following disappointing economic reports.
More worries about public finances in the eurozone also brightened the dollar's shine.
Weaker-than-expected news on employment and durable goods orders, a looming overhaul in U.S. banking rules and fears of default on European government debt all helped drive the dollar 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 in New York, it fetched $1.3978 compared with $1.4038 late Wednesday.
The British pound dropped to $1.6127 from $1.6179, while the dollar was flat at 89.90 Japanese yen.
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 fell short of expectations. The disappointing reports compounded uncertainty about how strong the U.S. economy is.
Meanwhile some investors are looking ahead to when the Federal Reserve may feel ready to raise interest rates off their historic lows, which would be a positive factor for the dollar.
On Wednesday the Fed held short-term rates near zero but also said economic activity continues to strengthen. One Fed official voted against the Fed's pledge 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 down a currency as investors move funds to other currencies that have higher yields. The U.S. has one of the lowest official interest rates of the major economies, and many emerging-market countries have substantially higher rates.
UBS is predicting a value of $1.35 for the euro as concerns over Greece's public finances continue. Greece's problems are also causing anxiety about high levels of indebtedness in other European countries such as Portugal.
In other late trading Thursday, the dollar edged up to 1.0514 Swiss francs from 1.0492 francs, but slipped to 1.0651 Canadian dollars from 1.0659 late Wednesday.


Updated : 2021-05-08 06:19 GMT+08:00