Dollar Trades Near 6-Week Low

29/12/2010 00:00 AST

The dollar weakened, dropping an eighth-straight day versus its Australian counterpart, amid speculation investors will seek higher-yielding assets.

The U.S. currency declined against all but three of its 16 most-traded peers before a report that may show businesses expanding at a slower pace, bolstering the case for the Federal Reserve to maintain debt purchases. Asian currencies climbed to their highest level in six weeks as foreign investors bought the region’s equities on growth optimism. The yen strengthened for an eighth day.

“January tends to be risk-on, and if you’re expecting risk assets to do well, now’s a good time to get in,” said Geoffrey Yu, a London-based currency strategist at UBS AG. “There’s some seasonality in terms of flow patterns and if funds have fresh liquidity there’s more money to invest.”

The dollar weakened 0.4 percent to $1.0140 per Australian dollar as of 9:32 a.m. in London, from $1.0100 in New York yesterday, when it reached $1.0152, the weakest since Nov. 9. It fetched 82.10 yen from 82.38 yen yesterday. The run of eight days of declines against the Japanese currency is the longest stretch since October 2004.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, was little changed at 115.34, after reaching 115.50, the highest level since Nov. 18.

The Institute for Supply Management-Chicago Inc. will say tomorrow its business barometer fell to 61.0 this month from 62.5 in November, according to the median estimate of economists in a Bloomberg News survey. Figures greater than 50 signal expansion. U.S. consumer confidence fell in December to 52.5, lower than the most pessimistic forecast of economists surveyed by Bloomberg, figures from the Conference Board showed yesterday.

The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners including the euro, yen and pound, dropped 0.2 percent to 80.214, trimming its increase for the year to date to 3.1 percent.

Bloomberg