Dollar stabilizes after 8th crisis

The dollar reached another all-time low against the euro and a 31-year low against the Canadian dollar on Monday before steadying slightly against both later in the trading day ahead of expectations from Friday's employment data.

An American manufacturing report came in lower than expected, boosting expectations that the Fed would cut rates again and sending Wall Street shooting past 14,000 for the first time in 2 1/2 months.

The Fed is widely expected to cut rates for the second month in a row in October as it tries to stimulate the U.S. economy.

The dollar's string of record lows began after the Fed cut rates last month by a larger-than-expected half percentage point.

The lower U.S. interest rates, used to jump-start the economy, can weaken its currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns.

In late New York trading, the dollar crept up to $1.4238 against the euro after touching an eighth all-time low against the 13-nation currency of $1.4283 early in Asia. The euro was still up from the $1.4160 it bought late on Friday in New York.

The Canadian dollar, a commodity-driven currency, hit a new 31-year high of $1.0093 Monday before retreating to 99.12 U.S. cents in later trading, beating Friday's previous high of $1.0091. The currency, which traded at 99.37 U.S. cents in late trading Friday, has gained strongly in September on the rise of its exports and the weakness of the U.S. dollar, achieving 1-to-1 parity with the U.S. dollar for the first time on Sept. 20.

The Australian dollar, also a commodity-driven currency, hit an 18-year high against the dollar at 89.48.

The Institute for Supply Management's factory index, released Monday, measures the growth of U.S. manufacturing. It showed September manufacturing at 52.0, below forecasts, and at its slowest pace in six months.

"A lot of people are sitting on their hands on the dollar until we get some kind of clarity that we'll continue an ongoing drift lower on the dollar," said David Solin, a partner at Foreign Exchange Analytics in Essex, Connecticut. "The trend in the dollar is down. Most of (these positives) are technically driven."

A stronger test of economic recovery, he said, would come with Friday's August employment data. A positive reading could be an impetus for dollar-buying, prompting dollar stabilization.

The U.S. has been running large trade and budget deficits for years - factors that tend to undermine a country's currency in the long term, unless they are offset by foreigners' willingness to invest money in the United States.

In other New York trading, dollar gained. The British pound fell slightly to $2.0442 from $2.0454 late Friday, while the dollar rose to purchase 115.77 Japanese yen from 114.74 and to buy 1.1687 Swiss francs, from 1.1635 late Friday.

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Author`s name Angela Antonova