SBC::Dollar Drops to New All-Time Low Vs. Euro

pat boyack pat@PATBOYACK.COM
Tue Nov 30 11:20:14 EST 2004

As the dollar drops I was wondering how it will, or is effecting American
bands touring over there.

Pat B

Dollar Drops to New All-Time Low Vs. Euro

By GEIR MOULSON, Associated Press Writer

BERLIN - The U.S. dollar dropped to a new all-time low Tuesday against the
euro, which rose to $1.3335 even as new figures showed that U.S. economic
growth in the third quarter was stronger than previously thought.

The dollar's persistent slide has been fueled by concern over the U.S.
trade and budget deficits, and economists say markets are paying only
limited attention to economic data against that background.

The dollar hit its new low against the euro, breaking the previous record
of $1.3329 set Friday, shortly after European Central Bank President Jean-
Claude Trichet renewed his assertion that the euro's rapid rise against
the U.S. currency is "unwelcome."

The dollar also slipped against the Japanese yen Tuesday, falling to
102.54 yen from 102.88 yen on Monday.

Because the euro's rise tends to make European products more expensive,
European leaders have voiced fears that it might hurt the continent's
export-driven economic recovery.

The weak dollar also makes life tougher for Americans living abroad, and
the U.S. military announced this week that troops stationed in Europe
would receive a significant cost of living increase to help provide some

Still, Trichet's comments in testimony to the European Parliament — which
echoed his previous remarks — didn't appear to advance the chances of the
ECB wading into currency markets to reverse the tide, said Lee Ferridge,
chief currency strategist at Rabobank in London.

"It doesn't seem to be top of the agenda at the moment," he said, adding
that "the trend is still intact" and the euro could top $1.35 in the next
two weeks.

Economic data from the United States Tuesday was "OK but mixed," and
markets remain more concerned with the twin U.S. deficits, Ferridge said.

Before the dollar dropped to its new low, the Commerce Department reported
that the U.S. economy — helped out by more brisk consumer and business
spending — expanded in the third quarter at an annual rate of 3.9 percent,
stronger than previously thought.

The new reading on gross domestic product, which is based on additional
data, was up from the 3.7 percent growth rate first estimated for the July-
to-September quarter.

Meanwhile, a private research group reported that U.S. consumer confidence
declined for the fourth consecutive month — defying market expectations of
an increase.

The dollar perked up slightly after a report that showed Chicago-area
manufacturing activity grew at a greater than expected pace in November,
with the euro slipping back to $1.3315.

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