NEW YORK, October 13, 2009 (AFP) – The dollar faced more headwinds Tuesday and the euro leapt to a new 2009 high on the greenback, as rising economic confidence whetted investors’ appetite for the riskier assets. The euro earlier in the day fell as low as 1.4762 dollars after publication of Germany’s ZEW survey which showed that Europe’s largest economy was recovering slowly.
The ZEW index, which measures the confidence of financial market players in the future health of the economy, fell to 56.0 from 57.7 in September.
Sacha Tinhanyi at Scotia Capital said the dollar has been on a steady downtrend but is still above its low against a basket of currencies hit in March 2008.
If the dollar is able to hold to a moderate pace of decline, he said, “we shouldn’t see any massive breakdown in dollar confidence, as the decline is far from being characterized as violent, though more rapid than most would prefer.”
He said the dollar is unlikely to see much support until there are stronger hints that the US Federal Reserve will lift interest rates from near zero.
“Fed funds futures are not pricing in a rate hike until at least April of next year, which is still aggressive considering historical pre