The dollar hit a five-month low against the euro on Wednesday and hovered near its lowest of the year against a currency basket as traders continued to dump the U.S. currency for higher-risk ones due to ongoing speculation the global economy may be recovering. The dollar-dumping trend from the past month or so remained firmly intact, with the U.S. currency also hitting its weakest levels since autumn against sterling and the Australian dollar. The euro climbed as high as $1.4337 according to Reuters data, its strongest since December, before pulling back slightly as European share prices slipped in early trade.
Investors offered limited initial reaction to a final reading of euro zone services PMI, which was revised up to a seven-month high of 44.8 in April from an initial reading of 43.8. Forecasts had been for 44.7 [ID:nLAG003476].
Analysts said the weak dollar trend was rock-solid for the moment, pointing out traders had dumped the U.S. currency on the back of surprisingly strong U.S. housing data, while brushing off comments from the United States that China expects the dollar will remain the world's reserve currency. "The dollar-negative sentiment is set to continue for the moment, and it's dangerous to go against the trend," said Antje Praefcke, currency strategist at Commerzbank in Frankfurt. Continued...
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