Youssef Al Feel, along with his brothers and cousins, managed to break the windows and enter flooded houses — moving people to safety for an entire day
The low-yielding yen also fell as a rebound in global stocks perked up demand for higher-yielding currencies, while the euro broke above $1.48 and was on track for its best daily gain against the greenback in a year.
“Every day, you can tabulate a small list of what’s ailing the dollar, and speculation about currency pegs and the housing data didn’t help at all,” said Stephen Malyon, senior currency strategist at Scotia Capital in Toronto.
Earlier talk of an emergency interest rate cut from the Federal Reserve also weighed on the dollar and boosted stocks. The central bank declined to comment.
The Fed’s next policy meeting is on Dec. 11. Markets expect a quarter-point cut in the 4.50 percent federal funds rate and analysts will scour minutes from the Fed’s last meeting for clues when they are released at 2 p.m. (1900 GMT).
The euro pushed to an all-time high of $1.4813 EUR, according to Reuters data, after a report showed U.S housing permits fell 6.6 percent in October, a 14-year low. The euro traded up 0.8 percent at $1.4785.
“It looks like the trend is for more pronounced weakness in housing, not less, and people fear that is going to have a big impact on the broader economy,” Malyon said.
The dollar fell below 1.1100 Swiss francs for the first time ever CHF. The euro rose 1.2 percent to 162.84 yen EURJPY and hit a 4-1/2-year peak against sterling EURGBP as global stocks gained, prompting investors back into carry trades funded with cheaply borrowed yen. The dollar gained 0.4 percent to 110.14 yen JPY.
Traders said the euro got a boost from speculation that countries in the Gulf region may drop or revalue their dollar currency pegs, which could free them to reduce dollar buying and to hold more of their reserves in other currencies.
A Saudi newspaper quoted an official of the Gulf Cooperation Council, a regional economic block, as saying Saudi Arabia may be reluctantly considering its first riyal revaluation in two decades in response to the declining value of the dollar. Kuwait de-pegged the dinar in May and the United Arab Emirates said last week said it may follow suit. The GCC, which also includes Qatar, Oman and Bahrain, will review currency issues at a Dec. 3-4 meeting.
Bank of New York Mellon strategist Michael Woolfolk said the news was “a major factor” contributing to dollar losses, as is fear that dollar weakness may push the Organization of Petroleum Exporting Countries to stop pricing its oil in dollars.
But Win Thin, currency strategist at Brown Brothers Harriman in New York, said the latter is unlikely, as “most of OPEC is savvy enough to realize currencies move in cycles.
“People are grasping for any reason to sell dollars, though that does show how dollar-negative sentiment is,” Thin said.
Attention now turns to the FOMC minutes. The Fed has slashed interest rates by 75 basis points this year and markets expect another cut in December as the Fed tries to prevent housing and financial troubles from slowing the wider economy.
Indeed, the dollar’s decline accelerated after the Fed first cut rates in September and its dwindling yield advantage over other currencies has kept it on the ropes.
That pressure could ease in the weeks and months ahead now that markets are starting to price in rate cuts from the Bank of England and Bank of Canada.
“Once they start to smell lower rates in the eurozone, things could change. But I don’t think we’re quite there yet,” said Scotia’s Malyon. “That’s more of a 2008 story.”
Youssef Al Feel, along with his brothers and cousins, managed to break the windows and enter flooded houses — moving people to safety for an entire day
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