Euro strikes 16-month high against dollar

The dollar has been dropping to its lowest levels compared to both the Euro and the Swiss Franc. Investors are awaiting the results from Federal Reserves two day policy meeting in which they will be discussing the current interest rates.

Apr 26 08:59 AM US/Eastern

The euro struck a 16-month high against the dollar and the Swiss franc notched a record high versus the US unit Tuesday amid heightened investor nerves over this week's busy economic calendar.

The European single currency hit $1.4653 in morning trade, the highest point since mid-December 2009, as many dealers returned from a long holiday weekend. It later stood at $1.4619, compared with $1.4572 late in New York on Monday.

The dollar meanwhile tumbled to an all-time low point of 0.8745 Swiss francs.

Investors moved to adjust positions ahead of the US Federal Reserve's two-day policy meeting, which was to open later on Tuesday, dealers said.

The central bank's Federal Open Market Committee is widely expected to maintain interest rates at between zero and 0.25 percent, where they have stood since December 2008.

Traders are also eagerly awaiting Thursday's publication of US gross domestic product (GDP) data for the first three months of 2011.

"The US dollar continues to remain under pressure ahead of this week's key FOMC rate meeting tomorrow and first quarter GDP figures, which are due on Thursday," said CMC Markets analyst Michael Hewson.

Markets are keenly awaiting Fed chairman Ben Bernanke's first news conference on Wednesday after the meeting. It will be the first by any Fed chief, in contrast with regular news conferences held by European Central Bank President Jean-Claude Trichet.

"As such markets will be closely scrutinising the post-FOMC meeting press conference for clues as to the committee's thinking ... especially in light of the recent downgrade by S&P of the outlook for the US economy," added Hewson.

Standard & Poor's shook the markets last week when it downgraded its ratings outlook on US debt for the first time ever, putting the spotlight on Washington's consistent failure to stabilise the US public finances.

The downgrade and a warning that S&P could cut the rating outright if no solution is forthcoming has pressured the dollar since even though the eurozone has its own debt problems which refuse to go away.

In London on Tuesday, the euro changed hands at $1.4610 against $1.4572 late in New York on Monday, at 119.38 yen (119.28), £0.8862 (0.8833) and 1.2815 Swiss francs (1.2840).

The dollar stood at 81.71 yen (81.82) and 0.8871 Swiss francs (0.8808).

The pound was at $1.6484 (1.6493).

On the London Bullion Market, gold prices stood at $1,504.65 an ounce compared with $1,504 late Thursday, when the market shut for the long holiday weekend. However, gold hit a record $1,518.32 in Asian trading hours on Monday.

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