NEW YORK -- The US dollar sank to an all-time low against the euro yesterday amid concerns over the US trade and budget deficits and worse-than-expected US employment data.
The euro rose to a record high of $1.3470 in European trading before easing back to $1.3432 in late New York trading, up from $1.3417 late Monday. The old record was $1.3460, set Friday.
Without consistent, positive US economic data, analysts don't expect a turnaround.
"We've got some short-term spec guys playing these ranges, but the dollar bulls are still not in the market," said Nas Nijjar, a foreign exchange trader.
European finance ministers have voiced angst over the euro's rise but US officials have not, leaving traders no reason to reverse the trend. "Without a concerted push from both the States and Europe, the markets are happy with the US dollar decline," Nijjar said.
The Bush administration has professed a "strong dollar" policy but has also said it will let market forces set the strength of the currency. Most analysts see the United States content to let the dollar fall because it has been making American exports cheaper.
On the other hand, Europe's fragile economic recovery is export-driven, and the strong euro has either been making European goods more expensive overseas, or cutting into producers' profits as they try to hold the prices steady.
The euro, shared by 12 European countries, has shot up from about $1.20 since September.
The ECB "must design its interest rate policies and its intervention policies in such a way that growth in Europe is fostered, rather than the opposite happening," German Chancellor Gerhard Schroeder said yesterday during a visit to China. "I believe it will fulfill its responsibility."
At the year-end press conference yesterday of Germany's central bank, the Bundesbank, bank president Axel Weber reiterated that the rise of the euro is "unwelcome." Asked about the possibility of an intervention on the foreign exchange market, he said "interventions are a tool that are always available to central banks."
The comments followed similar comments out of a meeting in Brussels on Monday of EU finance ministers, where Austrian Finance Minister Karl-Heinz Grasser said it was important for Europe "to engage in a serious and intensive debate" with the Bush administration on the weakening dollar.
The comments had only a short-term effect, with markets being driven yesterday more by US employment data released Friday that showed the weakest jobs gain in five months and just more than half what economists had forecast, said Commerzbank analyst Michael Schubert in Frankfurt.
European leaders will likely wait at least until there is good jobs data from the United States before considering any kind of intervention, Schubert said.
The dollar ended mixed against its other major rivals. The British pound rose to $1.9459 from $1.9413, while the dollar bought 102.84 Japanese yen, down from 103.23; and 1.2075 Canadian dollars, up from 1.1980.