Friday, Aug 15, 2008
The dollar struck a six-month high against the euro on Friday, with more investors bailing out of bets favouring the single currency and commodities as evidence mounts of a slowing global economy.
Gold tumbled nearly 3 percent to be below $800 and silver plunged 11 percent, prompting more investors to unwind their bets against the dollar and driving the U.S. currency’s trade-weighted index up to a six-month high.
Analysts believe the dollar is in the early stages of a broad recovery from record lows hit earlier in the year, but some said it may soon take a breather because the dollar index has posted gains for 11 straight days in its bull run.
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“The dollar is at a medium-term turning point, and current levels will provide a floor for the next 6-12 months,” said a senior dealer at a Japanese trading firm.
Among the key milestones achieved in the past two weeks, the dollar index snapped a three-year downtrend and broke above its 200-day moving average for the first time in 2-½ years.
The euro slumped to a six-month low of $1.4750, before trimming some losses to $1.4781 down 0.2 percent from late U.S. trade.
The dollar was boosted on Thursday by data showing the euro zone economy contracted in the second quarter for the first time ever and U.S. consumer prices accelerated to a 17-year high in July.