The US dollar tumbled to a fresh nine-month low in trade-weighted terms yesterday amid further signs that US gross domestic product growth peaked.
The Conference Board's index of leading indicators fell by 0.1 per cent in September, the fourth straight monthly decline in the measure, which is designed to look forward three to six months.
Although largely expected, the data are seen as reducing still further the likelihood of an interest rate increase in November.
Since a US slowdown is a potentially worrying scenario for US equities, the talk did nothing to soothe fears that the US may struggle to attract sufficient capital inflows to fund its vast trade deficit without significant dollar depreciation.
A Federal Reserve gauge of business activity in the mid-Atlantic region states surged to 28.5 in October, far higher than economists' predictions for an increase to 17.0 but this only gave the US currency a fleeting lift.
With political factors also overhanging the currency and momentum investors jumping on board as technical levels were breached, the dollar slumped 0.9 per cent to a four-month low of 107.43 against the yen and 0.7 per cent to a two-month low of $1.8283 against sterling.
The dollar clawed its way back to $1.2617 against the euro, a touch above a fresh eight-month low of $1.2651. The latest rise in the value of the euro against the dollar will make life difficult for Irish exporters to the US, though it will reduce the price of imports from the US market. Entering a meeting of EU finance ministers yesterday the Minister for Finance, Mr Cowen, said he saw no problem with the euro's current exchange rate.
With no major data expected today, consumer confidence figures due on Tuesday will be the next major set of US data to influence the currency. - (Financial Times Service/Reuters)
