Dollar rally pauses, perhaps not for long
2/8/2010NEW YORK — The rebounding dollar took a break Monday as some investors second guessed of the risk of government defaults in Europe.
In afternoon New York trading Monday, the 16-nation euro rose to $1.3701 from $1.3634 late Friday. It bottomed at $1.3586 last week, its weakest point since May 2009, amid concerns about unsustainable debt levels in Greece, Portugal and Spain possibly undermining the unity of the eurozone itself.
The Greek government has made moves to raise taxes and cut wages. Meanwhile, eurozone representatives at the Group of Seven meeting last weekend "indicated it would ensure that Greece would tackle its deficit issues," said Brown Brothers Harriman analysts in a research note.
But many expect the euro to remain under significant pressure. Traders have increased sell orders on the euro to record levels, according to UBS analysts.
This year, the euro is down 4.6 percent against the dollar. The dollar took a beating last year as the U.S. stepped in to save failing banks. Just last November, the euro was trading above $1.50.
In other trading, the British pound rose to $1.5640 from $1.5602, while the dollar dropped to 89.34 Japanese yen from 89.24 yen, slipped to 1.0704 Canadian dollars from 1.0731 Canadian dollars and fell to 1.0695 Swiss francs from 1.0746 francs.