[NYTr] Euro smashes another record against battered dollar

[All the News That Doesn't Fit]

AFP - Sep 25, 2007
http://www.afp.com/english/news/stories/070925170704.2q57e1lb.html

Euro smashes another record against battered dollar

LONDON (AFP) - The euro smashed another record Tuesday against a
steadily weakening US currency, rising to 1.4154 dollars on renewed
fears for the health of the US economy, the world's largest.

The euro broke its previous daily record, 1.4130, on Monday, on news
that US consumer confidence had fallen to a near two-year low in
September and that sales of existing homes had declined 4.3 percent in
August.

The single European currency was later trading at 1.4130 dollars.

"It continues to be all bad news from the US economy, with today's data
showing continued weakness in the housing sector and a weakening
consumer confidence," said analyst Audrey Childe-Freeman of the
Canadian Imperial Bank of Commerce.

The Conference Board, a business research group, said its consumer
confidence index fell to 99.8, down from a revised 105.6 in August.

The confidence reading was sharply below Wall Street forecasts of 104.5
and was at its lowest since 98.3 in November 2005. Last month the index
dropped from 111.9 in July.

"Weaker business conditions combined with a less favorable job market
continue to cast a cloud over consumers and heighten their sense of
uncertainty and concern," said Lynn Franco, the group's research
director.

Separately, the ailing US property market got more bad news as an
industry report showed existing home sales fell 4.3 percent in August
and that the glut of unsold properties rose further.

The National Association of Realtors (NAR) said credit market turmoil
hurt sales, making it harder for buyers to get mortgages in many cases.

The NAR said existing-home sales fell to a seasonally adjusted rate of
5.50 million units in August from 5.75 million in July.

"With Armageddon in the housing market, employment shrinking, energy
prices surging and another wave of mortgage resets on the way, you can
hardly blame consumers for feeling glum," argued Paul Ashworth at
Capital Economics.

"Together, these reports point to the need for further Fed action -- we
see rates at 4.5 percent by year-end" from 4.75 percent currently,
Ashworth added.

The US Federal Reserve last week lowered its benchmark interest rate by
half a point to 4.75 percent, making the dollar sharply less attractive
to investors.

The euro's surge against the dollar on Tuesday came despite a decline
reported earlier in the day in the German Ifo business confidence
indicator. The index fell 104.2 in September from 105.8 in August,
below a consensus for 105.0.

Elsewhere, the pound recovered some of the losses incurred in the early
morning after a report published in local media that the British
deposit protection scheme currently holds reserves of only 4.4 million
pounds.

Attention will be focused on the Bank of England's money market auction
on Wednesday, where 10 billion pounds will be offered at a penalty rate
with a three-month maturity and against mortgage loans as collateral.

Analysts said the results of the auction will shed more light on how
much stress the British financial system is facing from the fallout in
the US subprime market.

The euro was changing hands at 1.4130 dollars, against 1.4084 dollars
late on Monday, 161.70 yen (161.77), 0.7007 pounds (0.6964) and 1.6507
Swiss francs (1.6515).

The dollar stood at 114.44 yen (114.85) and 1.1682 Swiss francs
(1.1723).

The pound was being traded at 2.0168 dollars (2.0219).

On the London Bullion Market, the price of gold fell to 728.50 dollars
per ounce at the morning fixing from 730 dollars late on Monday.