The dollar slid yesterday to a six-month low against the euro, a two-month low against the yen and a six-month low against sterling, responding to poor US economic news.
Dollar bulls were disappointed by the rise in US unemployment to a 7½-year high of 6 per cent. The Institute of Supply Management non-manufacturing index fell, indicating that activity was still growing, but at a slower pace.
The euro rose to a high of $0.9175, the highest rate since early October. The dollar fell to a trough of 126.83 yen, the lowest since early March. Sterling rose to a peak of $1.4708 before falling back a little.
In the race to gain against the dollar's weakness, the euro held the advantage against sterling. The euro rose as high as 62.44p sterling by early New York trading, only a touch below the year's high point of 62.79p reached at the beginning of January.
The dollar and sterling suffer from similar risks: the perception that they are overvalued from a fair value perspective, and the large current account deficits which both the US and UK economies display.
The dollar's fall may have focused minds on sterling's plight, strategists speculated.
Dollar bulls acknowledged that yesterday's economic news was hardly positive for the dollar. But they said reaction had been exaggerated by the response of speculators.
The continuing rise in US unemployment was even seen by some dollar bulls as a good sign in some respects, signalling further gains in US productivity.
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