The dollar touched a
14-month high of $1.3444 per euro on Oct. 6 as the freeze in credit
markets and global stock losses boosted demand for U.S. Treasuries.
Banks' reluctance to lend to each other also caused a shortage of
dollars for funding, accelerating the currency's gain.
The euro headed for
a third weekly loss against the dollar and a second versus the yen on
speculation the credit crisis in Europe will deepen, prompting the
European Central Bank to cut interest rates. The bank two days ago
lowered its benchmark interest rate for the first time in five years.
The
currency has fallen 7.3 percent versus the yen this week, the most
since the euro's debut in 1999. ECB policy makers said yesterday they
expect the region's economic growth will remain weak for some time.
The yen rose against the dollar,
headed for its biggest weekly gain in a decade, on speculation a global
stock-market rout will prompt investors to pare holdings of
higher-yielding assets funded with the Japanese currency.
The yen
was on course for its largest weekly gain versus the euro as the Dow
Jones Industrial Average and Nikkei 225 Stock Average both fell below
9,000 for the first time since 2003.
EUR/USD failed to overcame
$1.3650 and ahead of US session start fell back to the session low at $1.3515/20.