Dollar dips at start of week; investors eye Fed

AP News
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Posted: Oct 18, 2010 3:54 PM
Dollar dips at start of week; investors eye Fed

The dollar dipped versus the euro and yen Monday as investors weighed the prospect of more relief from the Federal Reserve.

Several of the central bank's members, including Chairman Ben Bernanke, have said that they are prepared to start a program of buying bonds to boost the economy. Buying would lower interest rates, a move designed to encourage borrowing, but it would also put downward pressure on the dollar.

Late in New York, the euro rose to $1.3998 from $1.3963 late Friday. The dollar fell to 81.21 Japanese yen from 81.43 yen, not far off a 15-year low stuck Friday of 80.90 yen.

The British pound edged down to $1.5936 from $1.5985, however.

The dollar has dropped sharply since Bernanke first hinted on Aug. 27 that the Fed was ready to do more to support the economy.

The dollar has slid 7 percent since late August against a group of six major currencies, and last week sank to its lowest levels against the pound and euro since January. It also struck a series of record lows versus the Swiss franc and is flirting with parity against the Australian and Canadian dollars.

The dollar rose overnight but gave up most of those gains in New York. Reports released Monday pointed at continued weakness in the U.S. economy: output in U.S. factories, utilities and mines dropped 2 percent in September, the first decline since the recession ended in June 2009.

An industry group said its index of homebuilders' expectations rose to 16 in October from 13 in September. It was the first time in five months, but the index remains deep in pessimistic territory. A reading above 50 suggests homebuilders are optimistic about the real estate market.

In other late trading, the dollar gained to 1.0145 Canadian dollars from 1.0133 Canadian dollars, but fell to 0.9571 Swiss francs from 0.9598 Swiss francs.