NEW YORK (AFP) — The euro crossed 1.47 dollars Friday amid persistent speculation that poor US economic data could force the Federal Reserve to cut interest rates in 2008, dealers said.
The greenback was also under pressure as traders reacted nervously to the assassination Thursday of Pakistani opposition leader Benazir Bhutto, while activity was muted with many investors away for year-end holidays, dealers said.
The European single currency also hit new record highs against the pound, following a recent string of weak economic data in Britain.
The euro was at 1.4724 dollars around 2200 GMT, up from 1.4622 late Thursday. Earlier it had climbed as high as 1.4727 dollars.
The dollar fell to 112.32 yen from 113.67 late Thursday.
The murder of Bhutto on Thursday led to a sharp increase in risk aversion, boosting the Swiss franc and the yen.
"The events in Pakistan are clearly a significant crisis and have led to a substantial reassessment of risk in the market," said Simon Derrick at the Bank of New York Mellon.
Add to the mix Friday's weak US data on new home sales and Thursday's disappointing durable goods orders figures and it makes sense that the dollar has suffered as a result, Derrick said.
But he stressed that thin trading conditions ahead of the New Year's holiday Tuesday were causing increased volatility and exaggerated price movements.
US government data released Friday showed a nine-percent fall in sales of new homes in the US during November as a result of a lack of mortgage availability and consumer pessimism.
It was the slowest sales rate in more than 12 years and sharply exceeded market forecasts.
"The nine percent month-on-month drop in US new home sales in November ... is a clear illustration that the housing market is still in full retreat and a long way from bottoming out," said Paul Ashworth at Capital Economics.
Concerns about the persistent US housing market crisis and its impact on the world's largest economy are expected to keep the dollar under pressure.
"Investors are looking for the US housing market to bottom out before they can conclude that the worst is over for the US economy and the Federal Reserve will be able to stop cutting interest rates," said Derrick at the Bank of New York Mellon.
Meanwhile, the pound was squeezed after Nationwide bank reported a 0.5 percent fall in house prices during December.
It marked the second consecutive monthly fall and added to the raft of evidence that the British housing market is slowing significantly, underscoring the likelihood of a Bank of England rate cut in early 2008.
In late New York trade, the dollar was at 1.1263 Swiss francs, down from 1.1392 late Thursday.
The pound was at 1.9960 dollars, up from 1.9954.
The euro was at 0.7375 pounds, up from 0.7326.
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