February 24, 2005
Yahoo Finance

U.S. Dollar Slips Against Euro, Which Is Rising on Doubts About U.S. Trade Imbalances

BERLIN (AP) -- The U.S. dollar slipped Thursday against the euro, which was rising on doubts that the United States' trade imbalances will narrow soon.

The euro rose to $1.3236 in afternoon European trading, up from $1.3226 late Wednesday in New York.

The U.S. dollar was mixed against other major currencies, with the British pound at $1.9097, up slightly from US$1.9095. The dollar purchased 104.97 Japanese yen, up from 104.85 the day before.

Strength in the euro was largely seen as a result of Wednesday's release of minutes from the February meeting of Federal Reserve policymakers, who raised doubts that U.S. trade imbalances will narrow in the near term.

A renewed warning about the huge U.S. current account deficits from the head of the International Monetary Fund, Rodrigo Rato, helped encourage dollar-selling. Rato said in a speech in New York that he has "little doubt" that the recent low levels of the dollar reflect the deficit.

The dollar appeared to hold its ground in morning trading after the U.S. Commerce Department reported that orders for big-ticket manufactured goods fell 0.9 percent in January, the worst showing in three months. The Labor Department also reported the number of Americans filing new claims for unemployment benefits rose by 9,000 to 312,000.

The euro soared from about $1.20 in September to an all-time high of $1.3667 at the end of December, powered by concerns over the U.S. budget and trade deficits. The dollar has since regained some ground, but analysts think the recovery could be temporary and that the euro will continue its rise this year.

The euro spiked from $1.3067 at the end of last week to above the $1.32 mark on Tuesday after reports that South Korea was going to start diversifying its foreign reserve holdings. Though South Korea's central bank later denied that it would sell dollars to do so, the dollar has not yet recovered.

http://biz.yahoo.com/ap/050224/dollar_4.html