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Updating time :     22/11/2006 19:08 GMT

Dollar falls to 5-month low against euro on weak U.S. data

Dollar tumbled on Wednesday against the major currencies, hitting 5-month low versus euro and 2-month low against Japanese yen, partly helped by the thinned trading volume exaggerated the impact of negative views on the greenback. Investors sold the U.S. unit to minimize the risk exposure ahead of the market holiday in Japan and U.S. on Thursday and on the expectations that the Fed would not hike at least in the next two FOMC meetings.   
  
The pace of dollar's slide accelerated after news that U.S. jobless claims grew by 321,000 in previous week and University of Michigan consumer sentiment index fell to 92.1 in November from October's 92.3. Both data were worse-than-expected, indicating the U.S. economy is slowing down. As a result, euro and cable rallied to 1.2958 and 1.9168 while the greenback plunged to 1.2255 and 116.36 against the Swiss franc and yen.  
  
The Japanese yen also strengthened against the high yielding currencies, such as euro, sterling and Australian dollar as investors unwound part of their positive carry trades ahead of the holiday. Hence, eur/jpy, aud/jpy and stg/jpy retreated to intra-day lows of 150.66, 90.22 and 223.02 respectively.  
  
The buck also fell sharply versus the Canadian dollar and registered an intra-day low of 1.1382 after news that Canadian core-CPI grew by a stronger-than-expected 0.1% m/m in October.  
  
Japan and U.S. markets will be closed for public holiday on Thursday. Data to be released include German Q3 GDP and IFO index, Swiss Q3 payrolls, as well as U.K. quarterly report on business investment.

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