USD stronger; pound declines

The US dollar strengthened in relation to the euro and the pound Monday as the greenback was being sought out by investors as a safe place to put their money on the news that insurer American International Group (NYSE: AIG) will get up to $30 billion more in US government bailout money on top of the $150 billion bailout it got last year.

Equities markets declined on the news about AIG, which lost $61.7 billion in the fourth quarter of 2008.

The euro lost ground after the Markit purchasing managers’ report was at 33.5 in February, its lowest level in over a decade and after new orders to Eurozone manufacturers hit their lowest level ever in the same month.

In addition, it is widely expected that the European Central Bank will cut Eurozone interest rates to 1.5 percent later this week.

In late morning trade in New York, the dollar was at $1.259 to the euro while both currencies were lower versus the yen, which traded at ¥122.6552 to the euro and at ¥97.425 to the US currency.

Meanwhile, the pound declined in relation to the greenback, the yen and the Swiss franc on expectations that the Bank of England will cut interest rates in the UK to 0.5 percent on Thursday, and after the Bank said that 31,000 mortgages, fewer than expected, were approved in the UK in January.

At just past 11 a.m. in New York it took $1.3996 to buy a pound while the yen traded at ¥136.3541 to the pound and the Swiss Franc was at SFr1.6402 to the UK currency.

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