NEW YORK (CNN/Money) -
The dollar tumbled to a record low against the euro for the third straight session Monday as traders bet European authorities won't step in to try to slow the rapid rise of the European currency.
Treasury bonds fell in light trading, which exaggerated moves in both the bond and currency markets, traders said.
The euro bought $1.3615 late Monday, up from $1.3506 late Friday, after touching $1.3640 earlier in the session -- the third straight that the euro has hit a record high against the greenback.
The dollar also fell against the yen, buying ¥103.03 versus ¥103.64.
U.S. financial markets were closed Friday due to the Christmas holiday.
Analysts said traders were growing more confident that European policy-makers would not stop the euro's surge following a newspaper interview Friday in which Dutch Finance Minister Gerrit Zalm said the euro's rise was still within acceptable margins.
"The market is still reacting to the comments from Zalm," Jonas Ahlander, currency strategist at SEB in Stockholm, told Reuters. "There has been no news on the macro-economic front today."
Although light volume allowed relatively small orders to move the market, analysts said the dollar's fall wasn't due to any new information but rather a continuing trend based on fundamentals.
"It's more of the same, more dollar weakness and a continuation of the same theme going into the new year," Larry Brickman, currency strategist at Bank of America in New York, told Reuters. "We don't think the ECB is going to come in," he said, referring to potential steps by the European Central Bank to stem the euro's rise.
The view that Washington is encouraging a weaker dollar to reduce the United States' huge trade deficit is prompting many analysts to forecast a fourth consecutive year of dollar losses in 2005.
The yen fell earlier in the session on worries that the tsunami that hammered south Asia would pressure tourism-dependent economies. But the Japanese currency quickly gained back much of that ground.
So far this year, the dollar is down more than 3 percent against the yen and 7 percent against the euro.
The dollar's slide pressured bonds, with longer-dated debt posting the greatest losses amid light trading.
In the Treasury market, the benchmark 10-year note fell 19/32 to 99-21/32 to yield 4.30 percent, up from 4.22 Thursday. The 30-year bond sank 1-5/32 points to 106-22/32 to yield 4.92 percent, up from 4.84 Thursday. Bond prices and yields move in opposite directions.
The two-year note was down 2/32 at 99-21/32, yielding 3.05 percent. The five-year note fell 10/32 to 99-11/32 to yield 3.65 percent.
The bond market closed early Thursday, ahead of Friday's Christmas Eve holiday.
Analysts said the dollar's decline gave investors an excuse to sell bonds and buy debt from European issuers instead.
|
