Euro hits record against the dollar

Euro hits record against the dollar
By Neil Dennis
Copyright The Financial Times Limited 2007
Published: July 10 2007 11:24 | Last updated: July 10 2007 15:03


The euro hit $1.37 against the dollar for the first time on Monday after profit warnings in the US led to fears over the economy, particularly the housing market.

The single currency in early US trade was up 0.7 per cent at $1.3718 after Home Depot, the largest US home improvement retailer, cited the weak housing market for its profit warning.

Furthermore, DR Horton, the country’s second-largest housebuilder reported a 40 per cent drop in its third-quarter orders, prompting it to warn on profits also.

The pound also rallied against the ailing dollar, hitting $2.0230, up 0.4 per cent on the session.

The yen, recovering its ground from Monday’s lows as speculators trimmed back some of their exposure to risk.

Japan’s currency rose 0.9 per cent against the dollar to Y122.31 and 0.2 per cent against the euro to Y167.72. The yen rose 0.1 per cent against sterling to Y248.31.

The move was more notable against the New Zealand dollar, one of the favoured carry trade crosses due to its much higher yield over the yen. The kiwi lost 0.7 per cent against the yen to Y95.49.

Business confidence plummeted to -37 in the second quarter, from -15 in the first after the Reserve Bank of New Zealand raised interest rates to 8 per cent last month.

”The strength of the New Zealand dollar and recent monetary policy tightening from the RBNZ were clear factors weighing on the business sector,” said Stephen Halmarick at Citi.

Against its US counterpart, the New Zealand dollar fell 0.5 per cent to $0.7766.

Australia’s dollar, which has gained nearly 16 per cent against the yen since its year low in March, fell 1 per cent to Y105.05.

The pound was helped by surprisingly robust retail sales data from the British Retail Consortium. Like-for-like annualised sales growth of 1.8 per cent to 3 per cent in June, beat expectations of about 1.5 per cent growth.

Poor weather in June was expected to have severely affected retailers, while the impact of recent interest rate increases was also forecast to have been worse.

The pound rose 0.1 per cent against the dollar to $2.0175, but remained flat against the euro at £0.6766.