Dollar falls to 5-month low vs euro as traders expect Fed to take steps to shore up US economy

Dollar falls to 5-month low against euro

NEW YORK — The dollar fell to a 5-month low against the euro on Friday and lost ground against most other major currencies as traders looked for investments that could get them better returns.

Currency traders are reluctant to buy dollars because they expect that the Federal Reserve will try to drive interest rates lower. Lower rates tend to weigh on currencies.

In late afternoon trading in New York, the euro rose to $1.3472, up from $1.3335 late Thursday. Earlier in the day, it rose as high as $1.3492, its strongest level since late April.

A survey that showed a surge in German business confidence also helped the euro, which has risen more than 3 percent in the aftermath of the Fed’s suggestion on Tuesday that it is ready to make bigger moves to support the U.S. economy.

The dollar was flat against the yen, erasing big overnight gains that prompted speculation among traders that Japan had intervened in currency markets for the second time in two weeks.

But the Bank of Japan, the finance ministry and Cabinet all said they could not comment on that speculation, a departure from last week when Japan intervened in currency markets for the first time in six years.

The dollar edged up to 84.39 yen from 84.38 yen late Thursday. Earlier in Asia, the dollar had risen as high as 85.38 yen.

In other New York trading, the British pound rose to $1.5815 from $1.5696, while the dollar dropped to 1.0268 Canadian dollars from 1.0322 Canadian dollars.

The U.S. currency also fell to a 2 1/2 year low of 0.9870 Swiss francs earlier in the day before recovering to 0.9855 Swiss francs in the late afternoon, unchanged from Thursday.