By John Parry and Tyler Lifton Dow Jones Newswires
NEW YORK -- A swirling tide of bearish sentiment has pushed the dollar to fresh multimonth lows Friday, as investors continue to factor in the implications for the currency of the aggressive Federal Reserve (news - web sites) rate cut.
The dollar was depressed further -- most notably against the traditional safe haven currency, the Swiss franc -- after the United Nations (news - web sites) Security Council unanimously approved a tough new Iraq resolution, forcing Saddam Hussein (news - web sites) to disarm or face "serious consequences" that would almost certainly mean war.
"It's looks like some people are buying the Swiss franc on the war news," said David Leaver, senior trader at Gain Capital.
The vote came after eight weeks of tumultuous negotiations and was seen as a victory for the U.S., which drafted the resolution together with Britain.
The dollar has slipped below the key psychological level of 120 yen, while the euro is not far from its best level since July 22.
Around 10:45 a.m. EST, the dollar was at 119.94 yen, off its 119.91-yen session low, but still more than a full yen lower than its 121.11-yen level late Thursday in New York. The euro was at $1.0119, up from $1.0095 late Thursday. Against the Swiss franc, the dollar was at 1.4451 Swiss francs, down from 1.4496 francs late Thursday. The pound was at $1.5879, down from $1.5705.
The Security Council vote was "bringing Iraq back onto traders radar screens" and driving the Swiss franc up toward some key levels, said Tim Mazanec, senior currency strategist with Investors Bank & Trust in Boston.
If the dollar were to close above 1.435 francs in late dealings in New York Friday, that would pave the way for a move to 1.375 francs, Mr. Mazanec said.
After dollar sentiment has steadily waned amid a slew of weaker U.S. economic data during recent weeks, events over the past few days have tipped the scales more markedly against the currency.