Dollar rallies against euro, pound

The greenback is at a 21-month high against the 15-nation currency as the global rebound appears slower than in the U.S.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By Catherine Clifford, staff writer

Click chart to see how other world currencies are faring.

NEW YORK ( -- The dollar climbed to a nearly 2-year high against the euro Wednesday as fears that the economic recovery overseas will be slow in coming pushed investors toward the U.S. dollar.

"This is a global story [and] the way it appears right now is that the U.S. is the best house in a bad neighborhood," said Gareth Sylvester, senior currency strategist at HiFX in San Francisco.

Compared with other currencies around the globe, the greenback was perceived as a safer haven amid a growing feeling that the U.S. government's bailout efforts will lead to a faster rebound in the U.S. versus other countries.

The euro cost $1.2832, down from $1.3062. The euro hasn't traded this low since January 2007.

On Wednesday, British Prime Minister Gordon Brown echoed comments made a day earlier by Bank of England Governor Mervyn King that the United Kingdom, along with other countries, is pushing toward a recession. King on Tuesday also hinted that a U.K. rate cut may be on the horizon.

The dollar rallied against the British pound Wednesday. The pound cost $1.6254, down from $1.67055 late Tuesday.

There is a growing feeling that, not only the Bank of England but more European central banks will look to cut interest rates soon. Central banks lower lending rates in order to spur economic growth.

"The real core issue here is that U.S. rates are low, but I think U.K. rates and euro rates can fall," said Tom Benfer, director of foreign exchange at BMO Capital Markets.

"From last year [the U.S.] has already been on an aggressive rate cutting campaign," said Benfer. The Federal Reserve's key interest rate is at 1.5%, compared with the European Central Bank at 3.75% and the Bank of England at 4.5%.

While investors typically make investment decisions in order to gain the best possible return, Sylvester said the focus has shifted to not losing any value of the principal investment.

"It is not about yield anymore, it is not about growth outlook, it is about capital preservation," said Sylvester.

However, the greenback slid against the Japanese yen, which typically signals risk aversion on the part of investors. The dollar bought ¥97.86, down from ¥100.14.  To top of page

Track 17 major currencies

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.