The dollar rebounded for a second session against the yen and the euro today as traders and investors took profits on bets against the US currency before the year draws to a close.
The dollar was aided by a weak showing for Japanese machinery orders, while comments from German Chancellor Gerhard Schroeder that he was worried about the US currency's weakness against the euro helped to nudge the euro lower.
This came as dealers and speculators looked to wind down trades as the year-end holidays approach after having sold the dollar continuously since mid-October mainly on worries about the US current account deficit.
At 7 a.m., the dollar was at around $1.3315 against the euro, up from 1.3337 in late New York trade and off the record low of 1.3470.
While the dollar enjoys a breather from its long descent versus the euro and the yen, most traders believe its downtrend will stay intact.
As long as the market assumes that Washington wants a weaker dollar to help correct its trade imbalance and central banks do not stand in the way, investors and traders are expected to keep slicing the dollar's value.
The Bank of England is expected to keep interest rates steady today, while doubts are growing about the chances of further tightening next year. In contrast, the US Federal Reserve was expected to raise rates next week.