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US dollar falls against euro in profit-taking

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The dollar retreated against the euro on Monday on profit-taking, as traders girded for a choppy finale to the year.

[NEW YORK] The dollar retreated against the euro on Monday on profit-taking, as traders girded for a choppy finale to the year.

"Market movements were mostly a reflection of late-year position squaring and profit-taking after another year of broad outperformance by the US currency," said Joe Manimbo, senior market analyst at Western Union Business Solutions.

"The coming holiday-abbreviated weeks could see choppy, erratic market movements which is typical when volumes are lower and volatility tends to be higher."

The market will get a fresh bit of data Tuesday when the Commerce Department releases its estimate of third-quarter growth, projected by analysts at 2.0 per cent.

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Analysts cautioned that the euro could soon face renewed pressure against the dollar because of the gulf between US and European monetary policies now that the US Federal Reserve has officially enacted a hike in interest rates.

"Because of that, we'll probably start next year by probably pushing new lows in the euro, at least initially," said David Gilmore of Foreign Exchange Analytics.

"Between now and the end of the year, we'll probably be range bound."

AFP

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