The dollar hit a new low against the euro Friday and had the biggest weekly loss in almost four years against the Canadian dollar on speculation the Federal Reserve would keep cutting U.S. interest rates.
The U.S. currency dropped to an all-time low versus the euro after the Fed chairman, Ben Bernanke, said Thursday that the credit market turmoil might make the housing recession more severe. The central bank’s trade-weighted dollar index was at its lowest since its inception in 1971.
“The dollar weakness will drag on,” said Simon Derrick, chief currency strategist at Bank of New York Mellon in London. “The crisis is not over and the Fed is likely to cut rates further.”
The euro rose to $1.4077 in late trading $1.4066 at late Thursday. The dollar rose to ¥115.445 from ¥114.425 and to 1.1734 Swiss francs from 1.1724 francs. The British pound rose to $2.0190 from $2.0098.
The Canadian dollar rose as high as $1.0064 on Friday, the strongest since November 1976, bringing its gain this week to 3.1 percent. The U.S. dollar has lost 6.6 percent against the euro this year.
Wow, that’s crazy! In 2004, I used to do my grocery shopping in Canada because the Canadian dollar was worth 35 cents on the dollar. Now, the US dollar won’t buy 35 cents of Canadian stuff! If only I would have kept more money in my Canadian bank account — I would have had a 65% rate of return over 3 years, that’s nearly 22% a year!
Notes one blogger: The last time the two currencies were at par was in November 1976, the year Montreal hosted the Summer Olympics and Pierre Trudeau was prime minister.