Dollar Posts Biggest Decline Versus Euro Since 2006 on Housing

Bloomberg - The dollar posted its biggest weekly drop against the euro since April 2006 as a slumping housing market and upheaval in Pakistan made U.S. financial assets less attractive to international investors.

The U.S. currency fell against all 16 most-actively traded currencies except Mexico's peso this week as traders raised bets that the Federal Reserve will cut borrowing costs in January. The dollar has lost 10.4 percent against the euro and 5.7 percent versus the yen in 2007, and the European currency is up 5.2 percent versus the yen, its eighth annual increase.

``The dollar is like a sore thumb getting hit by a hammer,'' said Brian Dolan, chief currency strategist at Forex.com, a unit of the online currency trading firm Gain Capital in Bedminster, New Jersey. ``U.S. housing data shows no signs of any bottom in sight.''

The U.S. currency fell 2.4 percent this week to $1.4723 per euro, 1.5 percent to 112.28 yen and 2.5 percent to 1.1263 Swiss francs. The dollar touched $1.4728 per euro, 112.28 yen and 1.1259 Swiss francs, the lowest levels since mid-December.

Sweden's krona and Norway's krone led gains against the dollar this week, rising more than 2.8 percent. The Australian currency advanced 0.5 percent, the pound strengthened about 1 percent and the New Zealand currency increased 1 percent.

The U.S. currency weakened yesterday after the Commerce Department reported that sales of new homes in the U.S. fell to a 12-year low last month. Purchases dropped 9 percent to an annual rate of 647,000, and October sales were revised down to a 711,000 pace....

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