Oil prices send dollar lower again

Story link: Oil prices send dollar lower again

The US dollar weakened Tuesday in relation to the euro and other currencies on another surge in oil prices as crude oil reached a new record at $129.31 per barrel in New York.

In addition, the US Labor Department reported that producer prices were up 0.2 percent in April while core prices, excluding food and fuel, added 0.4 percent, twice the gain expected.

At the same time, the euro was helped by comments from a government advisor in Germany to the effect that the European Central Bank will likely raise interest rates as soon as the current financial crisis is over.

The greenback was trading at $1.5651 to the euro at around 11:15 a.m. in New York, while it took ¥103.7250 to buy a dollar after investors backed away from yen-financed carry trades as Asian equities markets declined and after the Bank of Japan held interest rates steady at 0.5 percent.

The dollar also declined versus the pound, the Swiss franc and the Australian dollar, with the dollar at $1.9690 to the pound while it took SFr1.0383 to buy a dollar and the Aussie traded at 95.84 cents US on a report that the Reserve Bank of Australia thought seriously about raising interest rates at its most recent meeting due to concerns about inflation.

Meanwhile, the Norwegian krone strengthened in relation to the euro and the US dollar on surging oil prices and on the possibility that Norges Bank will hike interest rates to 5.75 percent this year, from the current rate of 5.5 percent.

The krone traded at kr4.9999 to the dollar and at kr7.8300 to the euro in late morning trade in New York.