July 25, 2007	Wednesday	Rajab 09, 1428

LONDON, July 24: The euro surged to another record against the dollar here on Tuesday as the greenback continued to suffer from investor anxiety over the health of the US housing market and its effect on the broader economy.

The single European currency jumped at one point to $1.3852, the highest reading against the US unit since the euro’s creation in 1999. On Monday it rose to its previous high of $1.3845.

The euro in late trading fell back a bit and was at $1.3823 against $1.3811 late Monday in New York.

The dollar was meanwhile trading at 120.58 yen after 120.99 on Monday.

Most of the nervousness is directed at the “subprime” lending sector in the US, where loans are made to people with questionable credit histories.

Subprime lenders have lately suffered widespread mortgage defaults.

The latest bad news came on Tuesday when Countrywide Financial Corporation, the largest US mortgage lender, slashed its full-year earnings outlook and reported a 33 per cent fall in its second quarter profits, heightening fears of a spillover effect on other parts of the economy.

US Federal Reserve Chairman Ben Bernanke has said the squeeze in subprime housing does not appear to have spilled over to the broader economy, although there is a risk that it could occur.

Consumer spending accounts for about two-thirds of US economic activity.

Some analysts fear that just as Americans spent more during the period of rising home values according to the so-called “wealth effect,” they will retrench during a period of falling property prices.

The US currency has fallen to a 30-year low against the Canadian dollar, a 22-year low against the New Zealand dollar and a fresh 26-year low against the British pound.

Analysts are now doubtful therefore that the dollar will firm in the near-term.

“Given the dollar’s downside momentum, all of the week’s remaining US data releases must surely come through with flying colours in order to instil the market with any sense of caution in piling further pressure upon the greenback,” said Neil Mellor, currency strategist at Bank of New York Mellon.—AFP