Dollar hovers near 15-month low

The dollar's trade-weighted index hovered near a 15-month low on Tuesday on the view US interest rates will stay low, while sterling fell after Fitch said the UK was the major economy most at risk of losing its AAA rating. Analysts said investors lacked any catalyst to take the dollar much lower after its recent sharp falls, but they said the trend towards dollar weakness remained in place.
A dip in European equities and in oil prices kept investors cautious of increasing their exposure to risk, with the euro struggling to hold on to any gains above $1.50. The euro reversed an initial dip after a weaker-than- expected German ZEW survey showed investors more gloomy than at any time in the last four months.
"The ZEW was a pretty weak number, but the fall in the euro wasn't huge initially and it quickly fizzled out," said James Hughes, market analyst at CMC Markets. By 1242 GMT, an index of the dollar's performance against six major currencies was up 0.2 percent at 75.176. On Monday, it fell about 1 percent to a low of 74.93, its weakest since August 2008 and the biggest one-day drop since late July.
The euro edged down 0.1 percent to $1.4979, though still close to its 2009 high of $1.5064. The Australian dollar, a relatively high yielder, was down 0.2 percent at $0.9276. It had earlier hit $0.9324 after strong Australian business confidence data though it stopped just shy of a 15-month high of $0.9330.
Sterling fell after Fitch Ratings said that of the four major economies with top-notch AAA status, the UK was the most at risk, sending the pound down sharply to shed as much as a cent and a half on the day against the dollar. The pound slipped as far as $1.6600, well below a three-month high of $1.6844 reached on Monday, and fell to beyond 90.00 pence per euro. By 1225 GMT, it had pared some of those losses but was still down 0.6 percent against the dollar at $1.6655, while the euro was up 0.5 percent at 89.88 pence. Elsewhere, the yen pared earlier losses against the euro, which fell 0.1 percent to 134.84 as shares edged lower. The dollar edged up 0.1 percent to 90.06 yen.