The dollar tumbled to eight-month lows against the euro and six-month troughs versus the yen on Monday as worries persisted about the outlook for the U.S. economy. The dollar also fell sharply to eight-year lows against the Swiss franc and two-month lows versus sterling, with traders citing a close upcoming U.S. presidential election as another reason to sell the currency. "People are talking about all kinds of things that are bad for the dollar," said Mitsuo Imaizumi, deputy general manager of of forex and international bonds at Daiwa Securities SMBC. "We have the twin deficits, officials hinting a weaker dollar and (Democratic candidate John) Kerry's close fight. All these things are being talked about in the market."
Dealers say a victory for Sen. Kerry over U.S. President George W. Bush would be a signal to sell the dollar since his administration would likely be less tolerant about any Japanese intervention to stem the yen's rise. By 0303 GMT, the dollar bought 106.80 yen after falling to as low as 106.55, its lowest level since mid-April. It fetched 107.26 in late U.S. trade on Friday. The euro, which has risen 4.6 percent in the past three-weeks, rose as far as 1.2793, a fresh eight-month high. It was at 1.2766/69 , versus 1.2682 in late U.S. trade. Against the Swiss franc, the dollar extended its five percent fall of the past 11 days, hitting an eight-year low of around 1.1990 Swiss francs before stabilising around 1.2015. It was down sharply from 1.2107 in late New York trade on Friday. Sterling traded at around $1.8378 , up one cent on the day, after jumping to a two-month high of 1.8411.
107 YEN BREACHED
Traders said the dollar, which has slid over four percent against the yen during the past three weeks, is likely to slip further after it dropped below 107 yen -- the lower end of the five-yen range in which it had moved in the past five months. "We are more likely to see a move towards a (four-year) low of 103 yen now," said a dealer at a U.S. bank. But any falls versus the yen could be slow due to concerns that the Japanese government might intervene to sap the currency's strength. "Caution about intervention should limit steep falls, especially if the dollar drops below 106 yen," said the dealer. Finance Minister Sadakazu Tanigaki said on Friday his ministry would take action if the yen's value deviated from economic fundamentals. Most analysts say that any intervention is not likely to place until the dollar falls to around 105 yen. With the market focused on the dollar, traders said that currencies did not react to a powerful earthquake that struck Japan's Niigata prefecture, about 250 km (150 miles) north of Tokyo, on Saturday, killing 23 people. Dealers said the quake was unlikely to affect Japan's economy as the rural prefecture is not a major industrial region. Traders, instead, looked back to recent remarks by U.S. and European officials for reasons to sell the dollar. U.S. Federal Reserve President Janet Yellen said on Thursday the dollar is still "relatively high despite our large and growing trade deficit". Meanwhile, euro zone finance ministers and European Central Bank officials have said the euro's strength poses no problems at all. A stronger euro makes euro-zone exports more expensive on global markets, which cuts into the region's economic growth but makes rising oil prices more manageable.///www..com