New York, Nov. 19 (Bloomberg) -- The dollar fell to a six-day low against the euro on expectations a government report will show the U.S. trade deficit remained near a record high in September, underlining the need for the country to attract foreign capital to maintain the dollar's value. Unlike Europe and Japan, which have trade surpluses, the U.S. has to attract $1.3 billion a day in foreign investment to maintain the dollar's value, according to analysts' estimates.
``The wide gap between short rates in the U.S., and Europe and the U.K.'' makes it hard to overcome the deficit, said Tony Dolphin, who helps run $32 billion at Henderson Global Investors. ``The tendency is for the dollar to weaken.'' The dollar weakened to $1.0124 per euro at 8:10 a.m. from $1.0092 yesterday. It has fallen 12 percent against the 12-nation European currency this year. The U.S. trade deficit probably narrowed to $37.5 billion in September from August's record $38.5 billion, economists polled by Bloomberg News expect a Commerce Department report at 8:30 a.m. New York time to show. The benchmark interest rate set by the U.S. Federal Reserve is 1.25 percent, compared to a benchmark rate of 3.25 percent set by the European Central Bank. The euro may rise to $1.04 in the next four to six weeks, Dolphin said.
Against the yen the dollar rose for a fifth day, to 121.26 yen from 121.08 yen. A separate government report may show U.S. inflation is accelerating, reducing the value of dollar-denominated assets. U.S. consumer prices probably rose 0.3 percent in October after increasing 0.2 percent the previous month, economists expect the Labor Department report to show. //www.quote.bloomberg.com