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Dollar pulls away from record euro low

LONDON - The dollar pulled further away from a record low against the euro on Friday as rising US share prices provided some respite, while the yen was dented by political worries, dealers said.

They added that trading was somewhat subdued ahead of the weekend, given the lack of any key data releases.

The euro fell to 1.3788 dollars in morning European trade, from 1.3802 in New York late on Thursday. The dollar advanced to 122.32 yen, from 121.99 yen on Thursday.

The European single currency had struck an all-time high of 1.3833 dollars on Wednesday.

“Although the dollar is being bought against the yen ... the US currency still remains weak overall,” said Saburo Matsumoto, chief foreign exchange strategist of Sumitomo Trust Bank.

“We are watching how long this trend will continue ahead of economic data to be released next week.”

US corporate earnings have so far pleased investors and contributed to a rise on equities markets, with Wall Street hitting an all-time high overnight.

“The US corporate results for the second quarter haven’t turned out to be so bad,” added Kosuke Hanao, head of foreign exchange sales at HSBC.

“This is not a bad environment for investors.”

In recent weeks the dollar has been weighed down by the outlook for the American economy amid fears that problems in the troubled US housing sector could spread.

In addition, the US currency has been hampered by prospects of higher interest rates in Europe and elsewhere.

While the European Central Bank appeared set to lift eurozone borrowing costs in September from the current level of 4.00 percent, the US Federal Reserve has frozen American rates at 5.25 percent for the past year.

On Friday, meanwhile, both the Australian and New Zealand dollars hit new multi-year high points against the US dollar.

The Australian dollar struck an 18-year high point of 88 US cents, and the New Zealand dollar struck a 25-year peak of 79.57 cents, as dealers bet on rising interest rates in New Zealand next week.

Regarding the yen, dealers said they were already bracing for the potential defeat of Prime Minister Shinzo Abe’s ruling Liberal Democratic Party (LDP) in July 29 upper house elections.

A stinging defeat would likely trigger calls for Abe to step down and could usher in a new period of political uncertainty in the world’s second largest economy.

The euro was changing hands at 1.3788 dollars, against 1.3802 dollars late on Thursday, 168.62 yen (168.41), 0.6719 pounds (0.6736) and 1.6617 Swiss francs (1.6608).

The dollar stood at 122.32 yen (121.99) and 1.2056 Swiss francs (1.2031).

The pound was being traded at 2.0517 dollars (2.0486).

On the London Bullion Market, the price of gold climbed to 676.50 dollars per ounce from 674.50 dollars late on Thursday.