LONDON, March 3: The euro surged to a new high against the dollar on Monday, while gold and oil also struck records on a turbulent day for global financial markets.
The euro rose to $1.5274 in mid-afternoon trading as fresh evidence emerged of a softening US economy.
The plunging dollar was a driving force behind rises in dollar-priced commodities such as gold and crude oil. Crude hit $103.95 per barrel in New York and gold rose to $989.54 an ounce.
Dollar-priced goods rise when the dollar falls because a weaker US currency makes them cheaper for buyers using other, stronger currencies.
“It’s been a very volatile afternoon,” said Daragh Maher, currency strategist at Calyon.
The Institute of Supply Management said its survey of manufacturing activity fell to 48.3pc from 50.7 per cent in January. A number below 50 per cent signals declining activity.
This figure was broadly in line with expectations but was described as “very weak” by Maher.
In late European trading, the dollar recovered slightly from its record low to trade at $1.5184 against the euro.
The dollar sank to 103.54 yen compared with 103.73 late Friday, after earlier hitting its lowest level since January 2005.
The rise of the euro against the dollar and other major currencies led to concern at a meeting of finance minister from eurozone countries in Brussels.
A strong euro can be a double-edged sword for the eurozone economy.
The ECB holds a rate-setting meeting on Thursday.
“(Gold) prices found support from the dollar weakness, buoyant oil prices and inflationary concerns, and these factors as well as continued geopolitical tensions are likely to support prices in the near term to challenge the $1,000 per ounce level,” said Barclays Capital analysts.—AFP
