IBT: US Dollar falls To New Multi-month Lows Against Euro, Pound And Franc
RTTNews - Monday, the U.S. dollar headed south to new multi-month lows against its European, Swiss and UK counterparts as investor risk appetite dampened demand for the safe-haven greenback and boosted higher yielding currencies.
The dollar fell as General Motors is expected file for bankruptcy protection today, which would be the biggest industrial bankruptcy in the history of the U.S., in a deal that will give taxpayers a 60 percent ownership stake and expand the government's reach into big business.
The Obama administration said Sunday that it has deemed GM's reorganization plan viable, and will provide the company $30.1 billion in what is called debtor-in-possession financing - money the company can use while it moves through the bankruptcy process.
The company will also receive some support from the governments of Canada and Ontario, which will lend the firm $9.5 billion.
The dollar fell sharply against other major currencies in the past week as global shares surged up on recovery hopes. But contracting gross domestic product, tumbling business investment spending and homebuilding activity in the U.S. suggested lingering economic weakness and reminded investors that the road to recovery is far from near.
The greenback tumbled to a new multi-month low of 1.4247 against the euro during early deals on Monday. This may be compared to Friday's New York session closing value of 1.4148. On the downside, the next likely target for the greenback is seen around the 1.436 level.
The U.S. currency suffered significant weakness versus the euro in May, falling around 7% despite a series of disappointing news from Europe's largest economy, Germany.
The European Central Bank rate decision is due this week. In May, the ECB has lowered its main refinancing rate to a record low of 1 per cent to boost consumption.
The U.S. dollar slumped to its lowest level since October 2008 against the U.K. currency and hit as low as 1.6434 by 4:15 am ET Monday. At last week's close, the pair was quoted at 1.6190. If the dollar slides further, 1.667 is seen as the next likely target level.
The dollar fell nearly 10 per cent versus the pound in May and tumbled around 3.6% in the previous week on the back of rising U.K. equity markets and encouraging data. The pound is the only currency that has strongly appreciated against the dollar in the past week.
