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Dollar hammered by war worries
LONDON, England -- The dollar fell to a three-year low against the euro on Tuesday after the United States fuelled fears of war with Iraq and prompted worries of more terrorist attacks. The euros was just above $1.03 -- its highest level since 1999 -- in early London trading as investors dumped the dollar in wake of U.S. criticism of Baghdad's declaration to the United Nations on its weapons programs. The dollar was also weaker against the yen on Tuesday. U.S. Secretary of State Colin Powell said late on Monday there were "problems'' with Iraq's 12,000-page document but said the Bush administration would not be making its final assessment of the information until the end of the week. (Full story) Many currency traders took those comments as an indication that the U.S. could soon launch an attack on Iraq, raising concerns over the impact that a costly war would have on the world's biggest economy. Some also feared the administration's tough stand could be used by terrorists as an excuse for attacks such as those on September 11. "It's almost inevitable, it seems, that there will be criticisms about omissions within the document and people are saying that will be another step toward war in the Middle East and that is weighing on the dollar,'' Rob Hayward, senior foreign exchange strategist with ABN AMRO, told Reuters. Many analysts said the strength of the euro was due entirely to war concerns and not any improved economic conditions in Europe. "Though the euro kept rising, there was absolutely no economic news flagging some improvement in euro zone fundamentals,'' Hideki Hayashi, global strategist at Shinko Securities, told Reuters. Analysts said enthusiasm for the dollar could wane even further if U.S. industrial production numbers, to be released later on Tuesday, are below expectations. The market is looking for production to rise 0.1 percent in November after falling 0.8 percent in October. The U.S. consumer price index, housing starts and real earnings are also due to be released later on Tuesday.
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