Investors sell the euro versus the dollar because the European Central
Bank is likely to cut its benchmark rate toward 2.5 percent as oil
prices fall and growth slows, Citigroup Global Markets Inc. said.
``We believe that there is potentially a perfect storm building against
the euro,'' wrote Tom Fitzpatrick, New York- based global currency head
of strategy at Citigroup Global Markets, in a research note yesterday.
The currency may fall to ``at least $1.28 by year-end and maybe even
continue lower in 2009.''
The yen rose against the euro and the Australian dollar on
speculation central banks around the world will lower interest rates,
spurring investors to sell higher-yielding assets funded in Japan.
The yen gained the most against the Australian dollar after the Reserve
Bank of Australia said it saw a ``strong economic case'' for its Oct. 7
interest-rate reduction, fueling expectations for another cut. The U.S.
dollar rose to an 18- month high against the euro after Federal Reserve
Chairman Ben S. Bernanke called yesterday for government-stimulus
measures to avert a prolonged recession.
``The RBA minutes are a reason to push the yen higher against the euro
and other currencies,'' said Motonari Ogawa, director of currency
trading in Tokyo at Barclays Capital Inc., a unit of the U.K.'s
third-biggest bank. ``It's damaging for sentiment toward
higher-yielding currencies.''
EUR/USD remained under the pressure and ahead of US opening
fell under $1.3200 mark. Bids $1.3200, stops $1.3180, offers $1.3260,
$1.3280/85