The
dollar fell the most against the euro in a month and depreciated versus
the yen as a drop in consumer confidence and a surge in crude oil to a
record increased concern U.S. economic growth will slow.
The currency dropped for the first time in four days against the euro
and was down against all of its major counterparts. Canada's dollar
touched an eight-week high against the greenback as the increase in oil
bolstered demand for the nation's commodity exports.
``The dollar is under pressure,'' said Hidetoshi Yanagihara, senior
currency trader at Mizuho Corporate Bank in New York. ``Higher
commodity prices are affecting consumer confidence, casting a shadow on
the economy.''
The U.S. currency, which has risen 3.4 percent from a record low of
$1.6019 against the euro on April 22, is down 0.7 percent this week,
its second straight decline. The yen has fallen 1.7 percent against the
euro this week, the biggest drop since mid-April. It's down 0.9 percent
versus the dollar.
Crude oil rallied to the all-time high of $127.82 a barrel, leading
commodities higher, as Goldman Sachs Group Inc. raised its forecast for
the second half of this year to $141 a barrel, citing supply
constraints. The correlation coefficient between oil and the
euro-dollar exchange rate has been 0.95 for the past year, indicating
they have moved in the same direction 95 percent of the time.
``Today it's all about oil,'' said Alan Kabbani, senior currency trader
at Wachovia Corp. in Charlotte, North Carolina. ``There are a lot of
dollar-negative things coming out at the same time.''The dollar
weakened as a report showed confidence among U.S. consumers fell in May
to the lowest level in almost 28 years. The Reuters/University of
Michigan consumer sentiment index dropped to 59.5 this month, from 62.6
in April. The median forecast of 65 economists surveyed by Bloomberg
News was for a reading of 62.
The euro rose earlier against the dollar as European Central Bank
President Jean-Claude Trichet said the bank can't relax in its fight
against inflation.
``There is no place for complacency,'' Trichet said in a speech in
Brussels today. ``Price stability in the medium term has to be''
ensured. It's ``a necessary condition to sustain economic growth, job
creation and social cohesion.''