USD lower versus euro on interest rates, new home sales

Story link: USD lower versus euro on interest rates, new home sales

The US dollar dropped to its lowest level versus the euro in almost two weeks on Monday on expectations that the Federal Reserve will cut interest rates by another half of a percentage point when it meets later this week and on new data showing that new home sales were at a 12-year low in December.

New home sales were down by 4.7 percent in the last month of 2007, while the median price of a home dropped by 10 percent in December over 2006, the largest decline over 12 months in 37 years.

In early afternoon trade in New York, the dollar was trading at $1.4788 to the euro and at $1.9830 to the pound while it was at ¥ 106.7600 in relation to the yen.

While the yen remained little changed versus the greenback it dropped in relation to the euro to trade at ¥ 157.8767 to the shared currency while yen traded at ¥ 211.7103 to the pound.

Despite gains versus the US dollar and the yen, the pound weakened versus the euro, to 74.57p to the euro, on declines in the equities markets and on sentiment that the Bank of England’s Monetary Policy Committee will cut interest rates when it meets next week.

The Swiss franc gained on the US dollar, the Brazilian real and the South African rand as investors fled risk as equities markets declined again.

The franc traded at SFr1.0892 to the greenback, while 1 franc was worth R$1.6359 and R6.102.

The decline in the South African rand was due to power shortages which kept South African gold and platinum mines shut down.