Dollar falls in year-end trade

London: The US dollar fell broadly yesterday, hitting an all-time low against the Swiss franc, which was lifted by corporate buying, and a six-and-a-half week low versus the yen, while the euro recovered after recent weakness.

The euro jumped against the dollar after stop-loss orders were triggered at key chart points around $1.32 (Dh4.85).

It rose to $1.3274, its highest in more than a week, and extending its recovery from last week's three-week low of $1.3055.

"There will be some year-end positioning, but markets are very thin, which is why we are seeing quite strong movements," said Youna Park, Commerzbank currency strategist in Frankfurt.

The euro also gained against the sterling, rising 0.6 per cent to a five-week high of 85.93 pence.

The British currency is still hampered by concerns that planned harsh austerity measures will dampen an already fragile economic recovery in the United Kingdom.

"Essentially, the euro is rising on short-covering," said Estuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp in Tokyo. He added: "I think we'll need to watch the market a bit more to see how investors plan to allocate their money after Christmas and in the new year."

Weak outlook

Many in the market expect to see more euro weakness in the new year, however, because of worries that some Eurozone countries, such as Spain and Portugal, may need rescue programmes, tracking the path trodden earlier by Greece and Ireland.

Year-end flows were broadly negative for the dollar, which lost close to one per cent against a basket of currencies to 79.596, its lowest in 11 days, to take it below its 100-day moving average of around 79.808.

Meanwhile, oil markets rose yesterday to hover just below the 26-month high that was struck in the previous session after a blizzard on the US East Coast boosted demand for heating oil.

In addition to temporary weather effects, the oil bulls pointed to a series of positive economic figures that could stimulate fuel demand. "Data in recent weeks have been supportive of the stocks and commodity markets globally," said David Cohen, director of Asian Economic Forecasting at Action Economics. "The US will avoid a double-dip. The Asian region including Japan looks a little bit better, with its industrial production finally showing an increase," Cohen added.

The commodities markets hit new highs as China's rate hike barely hurt.

Soybeans and oil hit two-year peaks and copper hit record highs amid razor-thin trade as investors stayed focused on fundamentals in the final trading week of the year.