Nov. 30, 2004
By Geir Moulson, Associated Press Writer
Yahoo Finance
BERLIN (AP) -- The U.S. dollar dropped to a new all-time low Tuesday against the euro, which rose to $1.3335 even as new figures showed that U.S. economic growth in the third quarter was stronger than previously thought.
The dollar's persistent slide has been fueled by concern over the U.S. trade and budget deficits, and economists say markets are paying only limited attention to economic data against that background.
The dollar hit its new low against the euro, breaking the previous record of $1.3329 set Friday, shortly after European Central Bank President Jean-Claude Trichet renewed his assertion that the euro's rapid rise against the U.S. currency is "unwelcome."
The dollar also slipped against the Japanese yen Tuesday, falling to 102.54 yen from 102.88 yen on Monday.
Because the euro's rise tends to make European products more expensive, European leaders have voiced fears that it might hurt the continent's export-driven economic recovery.
The weak dollar also makes life tougher for Americans living abroad, and the U.S. military announced this week that troops stationed in Europe would receive a significant cost of living increase to help provide some relief.
Still, Trichet's comments in testimony to the European Parliament -- which echoed his previous remarks -- didn't appear to advance the chances of the ECB wading into currency markets to reverse the tide, said Lee Ferridge, chief currency strategist at Rabobank in London.
"It doesn't seem to be top of the agenda at the moment," he said, adding that "the trend is still intact" and the euro could top $1.35 in the next two weeks.
Economic data from the United States Tuesday was "OK but mixed," and markets remain more concerned with the twin U.S. deficits, Ferridge said.
Before the dollar dropped to its new low, the Commerce Department reported that the U.S. economy -- helped out by more brisk consumer and business spending -- expanded in the third quarter at an annual rate of 3.9 percent, stronger than previously thought.
The new reading on gross domestic product, which is based on additional data, was up from the 3.7 percent growth rate first estimated for the July-to-September quarter.
Meanwhile, a private research group reported that U.S. consumer confidence declined for the fourth consecutive month -- defying market expectations of an increase.
The dollar perked up slightly after a report that showed Chicago-area manufacturing activity grew at a greater than expected pace in November, with the euro slipping back to $1.3315.
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