The dollar rose against the currencies of commodity-producing nations from Australia to South Africa amid speculation a global economic slowdown will reduce demand for raw materials.
Norway's krone and South Africa's rand were among so-called commodity currencies dropping at least 1 percent, extending declines to a second day after crude oil fell below $100 a barrel and gold dropped 12 percent from a record reached three days ago. The euro fell as a report showed growth in Europe's service and manufacturing industries slowed more than forecast.
``The main driver is the liquidation of long commodity positions, specifically crude oil,'' said Lee Hardman, a currency strategist in London at Bank of Tokyo-Mitsubishi UFJ Ltd. ``That's potentially been a positive for the dollar on the back of the drop in commodity prices.''
The dollar advanced to $1.5443 per euro at 8:34 a.m. in New York, from $1.5626 yesterday, reaching the strongest since March 12. Norway's krone fell 1.6 percent to 5.2572 per dollar and touched the weakest since Feb. 26, sliding a sixth day. The rand fell a second day, by 0.9 percent to 8.1625 per dollar.
The U.S. Dollar Index traded on ICE Futures in New York, which compares the currency with those of six trading partners, rose a third day, to 72.7 from 72.144 yesterday. The gauge fell to a record 70.698 on March 17, when the dollar slumped to $1.5903 per euro, the lowest level since the euro's 1999 debut.
Gold Slumps
The dollar may rise to $1.5280 per euro in coming weeks, where it will meet resistance, a level where sell orders may be clustered, Hardman forecast. He predicts the U.S. currency will resume its drop, to $1.60 per euro, citing a ``continued erosion of the dollar's yield advantage'' as the Federal Reserve keeps cutting interest rates.
The dollar traded at 99.10 yen from 99.03 yesterday. The yen advanced to 153.13 per euro from 154.80.
Gold headed for its biggest weekly drop in 25 years, plunging 12 percent from its record $1,032.70 an ounce. Oil fell below $100 a barrel for the first time since March 5, and copper had its biggest two-day decline in seven months.
The Australian dollar fell 1.2 percent to 90.28 U.S. cents after touching 90.20, the lowest since Feb. 15. Shipments of commodities such as iron ore and coal account for about 17 percent of Australia's gross domestic product. Norway is the fifth-biggest oil exporter, after Saudi Arabia, Russia, Iran and Nigeria. Gold is South Africa's largest exports.
U.S. Influence
A preliminary estimate of Royal Bank of Scotland Group Plc's composite index of Europe's service and manufacturing industries fell to 51.9 in March, from 52.8 in February, Reuters Plc reported. Economists expected 52.4, the median forecast in a Bloomberg News survey. A reading above 50 indicates expansion.
The single European currency fell after European Central Bank council members Yves Mersch and Guy Quaden said yesterday financial-market turbulence caused by the U.S. housing slump will last longer than expected, weighing on Europe's economy.
``The weakness in the U.S. will be felt in the euro zone and by the third quarter we are expecting the ECB will be cutting rates,'' said Tim Condon, head of Asia research at ING Groep NV in Singapore. ``Right now, the markets are very bearish on the U.S. and less bearish on the euro, but as time passes, that is going to change.''
ECB policy makers have refrained from cutting borrowing costs as they weigh the risk of slowing growth against accelerating inflation. Investors still expect at least one reduction in the 4 percent benchmark rate this year, futures trading shows.
Franc Falls
A technical gauge that had in recent weeks indicated the euro may have risen too far and too fast fell below the level that signals a reversal for the first time since Feb. 26. The Relative Strength Index was at 62 today, from 75 yesterday. The 70 level indicates a currency may be overbought.
The Swiss franc declined against the dollar and the euro after Zurich-based Credit Suisse said writedowns of $2.65 billion, caused by deliberate mispricing by traders, will be spread over the fourth quarter and first three months of 2008.
The franc traded at 1.5651 per euro, from 1.5595 yesterday. Against the dollar, it declined to as low as 1.0168, the weakest since March 13, from 0.9982 yesterday.
The pound surged against the euro after a government report showed retail sales in Europe's second-biggest economy rose more than forecast last month. Retail sales increased an annual 5.5 percent, compared with an increase of 3.6 percent anticipated by economists in a Bloomberg News survey.
The U.K. currency rose to 77.92 pence per euro, from 78.76 pence yesterday and compared with a record low of 79.12 on March 17. It traded at $1.9819, from $1.9843.
Krona Rebounds
The Icelandic krona rebounded after slumping to a record low against the euro yesterday as risk-averse investors sold higher-yielding assets and widening losses at financial services companies pushed up the cost of insuring the country's banks against default. Iceland's main interest rate is 13.75 percent.
Iceland's currency traded at 121.599 per euro, from 122.0864 yesterday, when it plunged to a record 127.985 per euro. It extended its decline against the dollar, dropping 0.8 percent to 78.74, from 78.12 yesterday, when it touched 81.61, the weakest level since September 2003.
Futures on the Chicago Board of Trade indicate a 68 percent chance the U.S. central bank will cut its rate by another half point to 1.75 percent at its April meeting. The Fed has already slashed rates six times since September.
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