In fact the US$ seems to be dropping more rapidly against the yen, euro, sterling, etc. What's going on?
A bad bond auction, a sense that the U.S. economy may be weakening, persistent current account balances, maybe dislike of Bush.
Here's a Reuters piece. If the dollar were to rally, you'd see a Reuters story with almost exactly the opposite rationales, but this encapsulates the CW of the moment.
Doug
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Dollar Weakens on Sense of Economic Gloom By Jamie McGeever
NEW YORK (Reuters) - The dollar weakened across the board on Thursday, forging new lows as a deepening sense of gloom over the U.S. economic and external deficit picture weighed on sentiment, analysts said.
That, combined with the recent break of key technical chart support levels and warnings from Federal Reserve (news - web sites) officials on the unsustainability of the current account deficit, is putting the dollar under severe pressure, they added.
"You've got a combination of fundamental and technical factors which is sending the dollar lower," said Alex Beuzelin, senior strategist at Ruesch International in Washington, D.C.
Those fundamentals include soaring oil prices, falling U.S. bond yields, mixed economic indicators and record U.S. external deficits.
The euro's convincing break above resistance at $1.2460 last Friday and the trade-weighted dollar index's fall below 87.0 this week were also key developments, analysts said.
Around 10:45 a.m. EDT (1445 GMT) in New York, the euro was stronger at $1.2629 , close to its intraday peak of $1.2651, which was its strongest since late February. It is also exactly 3 cents away from its record high.
The dollar was weaker at 1.2167 Swiss francs , having reached a nine-month low of 1.2150 francs, within 20 ticks of a new eight-year low. The dollar was also off at 107.34 yen , a fresh four-month low.
As the dollar sinks against the yen, speculation is rising on verbal or actual intervention by Japan's monetary authorities.
Japan's Ministry of Finance has not sold yen in the currency markets since mid-March, but vice finance minister Koichi Hosokawa said his ministry would continue monitoring moves in currencies and take appropriate action if needed.
There is a growing sense, however, that global policymakers see a weaker dollar as fundamental to redressing U.S. imbalances and keeping its economy on track as the driver of global growth.
The starkest message came on Oct. 7, when Dallas Fed President Robert McTeer said: "Over time, there's only one direction for the dollar to go -- lower."
Fed governors Ben Bernanke and Susan Bies and San Francisco Fed President Janet Yellen are scheduled to speak on Thursday. St. Louis Fed President Poole made no reference to the economy in a speech earlier Thursday.
The dollar's weakness has intensified since McTeer's remarks and its general backdrop has deteriorated too. Bond yields and equities prices are falling, and oil and gold prices are rising. The yield on the benchmark 10-year Treasury note dipped to a six-month low below 3.96 percent in mid-morning trading on Thursday.
Lower yields weigh on a currency because investors look to fixed income assets in other countries for higher returns.
Against such a negative backdrop, rebounds in the dollar are merely being seen as better levels to sell.
"Any bounce in the dollar is likely to be muted," said currency analysts at HSBC.
That appears to be borne out by the dollar's reaction to the latest snapshot of the U.S. labor market. Jobless claims fell by 25,000 to 329,000 from a revised 354,000 the previous week, the Labor Department (news - web sites) said on Thursday. Economists had expected a fall of 7,000. But the dollar's lift was brief.
The Philadelphia Federal Reserve's gauge of manufacturing activity for October in the U.S. Mid-Atlantic region will be released at 12:00 p.m. EDT (1600 GMT). Economists' forecasts for the business activity index ranged from a reading of 9.0 to 23.0, compared with 13.4 in September. The median was 17.0.
Meanwhile, sterling was stronger after above-consensus U.K. retails sales data, trading up at $1.8283 .
High-yielding currencies such as the Australian and New Zealand dollars also scored multi-month records against the greenback, while the Canadian dollar also held near its recent 11-1/2-year high.