EUR/USD Breaks Long-Term Uptrend

The dollar rose against most key currencies Thursday as Libor soared to new highs, the commercial paper market slumped and the credit crunch deepened. Increased risk aversion supported the dollar as investors sold risky assets and repatriated the funds to US government papers, and international banks scrambled to find dollar funding in a dysfunctional interbank market. The yen gained as investors unwound carry trades. US stocks fell sharply as fears about worsening credit spreads and recession outweighed the prospect of a quick passage of the Bush Administration’s financial-market rescue bill. Sterling fell as UK house prices posted the biggest annual drop since at least 1991. The euro declined against its rivals as the European Central Bank saw increased risk to European economic growth. The Australian and Canadian dollars fell on falling commodity prices and global recessionary concerns.



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