Dollar Continuing Its Slide As Oil Prices Rises

The greenback traded near a one-month low against the euro and may weaken to $1.59 per euro and 101 yen in one month on speculation a surge in oil prices to record highs will increase inflation while slowing economic growth in the U.S., which is the world's biggest oil importer. The currency also traded near the lowest level in almost two weeks versus the yen before a government report that will probably show falling U.S. house prices. 'The U.S. economy is vulnerable to surging oil prices,' said Toru Umemoto, chief currency strategist in Tokyo at Barclays Capital, Britain's third-biggest lender. 'Stagflation risks in the U.S. are rising, buffeting the dollar.' The dollar is currently traded at $1.5766 per euro as of 8:00 a.m. GMT, after falling to $1.5816, the lowest level since April the 24th. The greenback is also trading at 103.14 yen after falling to as low as 102.74 yen, the weakest level since May the 12th. The euro is currently trading at 162.70 yen from 162.76 yen.

Sterling edged higher on Thursday, but stayed near a one-month low against the euro before UK retail sales data that may suggest more sluggishness in consumer spending as the economy continues to weaken. Additional signs of weakness would complicate matters for the Bank of England as it tries to balance an economic downturn with rising inflation risks. Minutes released on Wednesday from the BoE's Monetary Policy Committee meeting earlier this month showed that only policy dove Daid Blanchflower voted for a 25 basis point rate cut from 5 percent, further dampening expectations for a cut next month.

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