FOREX-Broad dollar losses deepen, hits 3-yr low vs yen
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LONDON, March 3 (Reuters) - The dollar's broad losses intensified on Monday, taking it to a record low against a basket of rival currencies and a three-year trough versus the yen, as concern about U.S. economic health gripped investors.
The dollar also hit a record low against the Swiss franc approaching 1.03 francs, while dollar/yen moved below 103 as worries about a U.S. recession stoked expectations of aggressive rate cuts.
The yen and Swiss franc benefited as investors unwound some leveraged carry trades, in which funds are borrowed in those low-yielding currencies to buy higher-yielding assets.
Risk aversion levels in markets were also rising as gold prices surged to a record high above $980 an ounce XAU=, with investors seeking safety as Asian and European stocks suffered from the sell-off on Wall Street last Friday. Japan's Nikkei share average .N225 tumbled 4 percent.
Shares in HSBC bucked the trend in Europe, rising almost 2 percent after the bank reported a 10 percent rise in profits last year, just below analysts' forecasts [ID:nWLB8013].
Analysts said that with U.S. authorities seemingly happy with a weaker dollar, the dollar's broad decline could deepen much further.
"I think we're into the last leg of the dollar sell-off but the big unknown is how big the leg is," said Derek Halpenny, senior currency economist at BTM UFJ.
"You can't rule out a mini crisis of confidence of some sort especially if more and more of the market believes this is exactly what the U.S. authorities want," he added.
The dollar was down around 1 percent from late U.S. trade on Friday at 102.83 yen JPY= having earlier hit 102.62 yen, its lowest since January 2005.
The euro held steady at $1.5182 EUR=, near a record high of $1.5238 hit last Friday, according to Reuters data. But the single currency shed 0.9 percent to 156.21 yen EURJPY=R
The dollar's trade-weighted index against six major currencies dropped to 73.445 .DXY, the lowest since it was created in 1973, while the Swiss franc hit a record 1.0308 per dollar CHF=.
INTEREST RATES IN FOCUS
The U.S. economic woes have heightened speculation the Federal Reserve could slash overnight rates by another 75 basis points before the end of the month to 2.25 percent and take rates below 2 percent by the end of the year. Continued...
