The euro is gaining ground on higher oil prices amid rising tensions in the Middle East and increasing expectations that more members of the Organization of Petroleum Exporting Countries will announce supply cuts.
This has exacerbated the dollar's ongoing weakness over the last few weeks, as traders have been selling the dollar for year-end booking clearing and on nagging signs of U.S. economic weakness.
"With a ballooning fiscal deficit and quantitative easing measures taking hold, the dollar fundamentally only has one way to go," said Tobias Davis, a senior foreign exchange dealer at Custom House in Victoria, B.C., referring the Federal Reserve's measures to flush money markets with liquidity.
The U.K. pound also continued its fall against the euro Monday, reaching a fresh all-time low against the common currency's main predecessor, the old Deutsche mark, which is often used as a historical reference for the euro that was introduced in 1999.
The euro rose as high as GBP0.9794 from a high of GBP0.9603 Friday, and currency markets are anticipating parity.
Monday morning in New York, the euro was at $1.4281 from $1.4071 late Friday, while the dollar was at Y90.36 from Y90.56, according to EBS. The euro was at Y129.04 from Y127.40. The U.K. pound was at $1.4598 from $1.4687, and the dollar was at CHF1.0458 from CHF1.0674 Friday.
Elsewhere, for the ninth time this month, Russia's central bank widened the ruble's trading band against its basket of 55% dollars and 45% euros.
Canada Morning
The Canadian dollar was modestly lower but within earlier ranges as trading resumed after a two-day holiday in Canadian markets.
The U.S. dollar was at C$1.2178 from C$1.2141 late Wednesday, the last day of full trading in the Canadian currency before the Christmas and Boxing Day holidays.
"The Canadian dollar's been stuck in a range, for sure," said Steve Butler, director of foreign exchange at Scotia Capital in Toronto.
"I don't think the market has figured out what it wants to do with Canada," he said.
"Liquidity is frightening. It's just so bad, right now," Butler said, adding that he doesn't expect it to improve before year end.
-By Riva Froymovich, Dow Jones Newswires; 201 938-5063; riva.froymovich@dowjones.com
(Jacob Gronholt-Pedersen in Moscow and Don Curren in Toronto contributed to this report.)
(END) Dow Jones Newswires
December 29, 2008 08:53 ET (13:53 GMT)
Copyright 2008 Dow Jones & Company, Inc.
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