The US dollar fell to two-month lows against the euro and a basket of currencies today, pressured by uncertainty over the fate of US automakers and reduced safe-haven flows.
The dollar was starting to respond negatively to concerns about further weakness in the US economy, analysts said, after a run of weak data caused an exodus from risky positions and increased flight-to-quality buying in the currency.
Investors shunned the greenback amid fears a failure of one or more of the automakers could exacerbate a year-long recession and drag down other companies.
"The uncertain outlook for the US automakers continues to keep investors wary of over exposure to the dollar at this point," said Omer Esiner, senior market analyst at Ruesch International in Washington.
"We're starting to see a shift in the market where negative data is starting to actually impact the dollar negatively, which is contrary to what we've seen for the better part of the last couple of months," he added. "We're seeing a naturally weaker dollar as we get into the year end, so bad news is only exacerbating the need for investors to just exit their long dollar positions."
In early New York trading, the euro was up 1.5 per cent at $1.3570 after climbing as high as $1.3584, the highest level since October 15th.
The ICE Futures US dollar index, which tracks the value of the dollar against a basket of six currencies, hit a low of 82.517, the weakest level since October 20th. It last traded down 1.3 per cent at 82.606.
Against the yen, the dollar fell 0.9 per cent to 90.31, after hitting a more than 13-year high of 88.10 yen on Friday. But yen gains were capped on speculation that Japanese authorities could intervene to stem further currency strength.
Reuters