The dollar fell for a record ninth day against the euro as stocks tumbled and concern mounted that President George W. Bush will lead an attack against Iraq without the support its biggest European allies.
The US currency dropped to a three-year low of US$1.0826 per euro at 5:16pm in New York from US$1.0745 on Thursday. It has declined every day since Jan. 14, the longest losing streak since the 12-nation currency started trading four years ago. The dollar lost 1.4 percent against the euro this week.
"There is a sense that the US is willing to go at it alone, which means that the risks are even bigger in terms of the impact on the economy and the potential for a terrorist reprisal on the US," said Rebecca Patterson, a currency strategist at JP Morgan Chase & Co, the fifth-largest trader in the US$1.2 trillion-a-day foreign-exchange market. The dollar may weaken to US$1.10 next week, Patterson said.
The dollar may weaken to US$1.10 to US$1.15 per euro in coming weeks, he said.
The benchmark 4 percent 2012 Treasury note gained 1/16, or 63 cents per US$1,000 face amount, to 100 9/16. Its yield fell 1 basis point to 3.93 percent.
Hans Blix, the UN chief weapons inspector, is scheduled to detail his findings to the Security Council on Monday.
Concern is mounting that a war to disarm Iraq may crimp economic growth, making it harder for the US to attract the US$1.4 billion a day in foreign investment it needs to offset the shortfall in its current account -- the broadest measure of international trade.
"Economic data in the US is consistently disappointing, and a growing number of investors are looking to the euro as a real alternative,'' said Lara Rhame, a foreign-exchange analyst at Brown Brothers Harriman & Co. The dollar may weaken to US$1.10 per euro next week, she said.
* The US dollar dropped to a three-year low of US$1.0826 per euro at 5:16pm in New York from US$1.0745 on Thursday.
* The greenback was little changed against the yen this week, weakening 0.01 percent to Japanese yen 117.82.
* The dollar was at SF1.3531, from 1.3632 late yesterday. The British pound bought US$1.6333 from US$1.6224.
Consumer confidence this month fell to the lowest level since October, and the number of workers filing new claims for state unemployment benefits rose for the first week in three in the week ended Saturday.
On Thursday, a government report is expected to show the economy grew at a 1 percent rate in the fourth quarter, according to the median forecast of economists surveyed by Bloomberg News.
That compares with previous estimates of 4 percent.
"We have been overweight euro-denominated assets versus the dollar for some time now, and we are still holding to it -- despite growth in Europe, which seems to be worse than in the US," said Anthony Borthwick, who helps manage US$15 billion at PanAgora Asset Management in Boston.
Foreign government institutions and central banks reduced their holdings of US Treasury and agency debt by US$3.32 billion to US$857.77 billion in the two weeks ended Jan. 22, according to Federal Reserve figures. Still, that 0.3 percent decline compares with a 19 percent rise in their Treasury and agency holdings during the past 12 months.
An 18.9 percent decline against the euro during the past 12 months is starting to benefit US companies with overseas operations, analysts said.
The greenback was little changed against the yen this week, weakening 0.01 percent to Japanese yen 117.82.
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