Currencies

Dollar decline continues as stocks jump

NEW YORK -The safe-haven dollar began the week lower as a Federal Reserve official urged the continuation of stimulus programs and as home sales in October greatly exceeded market expectations, revving up traders' taste for higher-yielding assets.

Gold prices surged to a new record high of $1,174 an ounce as investors looked for an alternative investment to a declining buck. The commodity is considered a hedge against the greenback because of its stable store of value.

In late New York trading Monday, the 16-nation euro rose to $1.4973 from $1.4857, while the British pound jumped to $1.6621 from $1.6481. The dollar was nearly flat at 89.02 Japanese yen from 88.96 yen.

Over the weekend, Fed official James Bullard said the central bank should continue to buy mortgage-backed securities, helping keep interest rates low, beyond the program's expiration in March. The Fed has committed to buying $1.25 trillion in the securities. Media reports said Bullard's comments followed a speech in New York on Sunday.

Continued low rates mean investors don't make much on their dollar-denominated investments, prompting them to transfer funds to where they can earn better returns.

Bullard is slated to be a member of the Federal Open Market Committee, the Fed committee that sets interest rates, next year, so investors watch his statements closely. Membership rotates among the country's regional Fed presidents.

Last week Bullard said that if the Fed acted according to historical precedent, it could wait until 2012 before raising interest rates.

European Central Bank officials are hinting that details of how to wind down eurozone stimulus measures may be released at its December meeting, analysts said.

Meanwhile, traders were increasingly likely to sell the dollar in favor of "risky" trades on the back of positive economic reports. New data also showed that economic recovery is gathering pace in the 16 countries that use the euro, while in the U.S., the National Association of Realtors, an industry group, said sales of existing homes shot up 10.1 percent from September to October. They hit a seasonally adjusted annual rate of 6.1 million last month, the highest level since February 2007.

A recovery in the housing market is viewed as essential to a broader economic rebound.

That drove stocks higher and the dollar lower. The two have tended to trade inversely ever since summer 2008 as better-than-expected reports boost stocks and recessionary developments propel the safe-haven dollar.

In Monday trading, the Dow Jones industrials jumped 1.3 percent, and broader markets were up 1.4 percent.

The dollar also weakened to 1.0093 Swiss francs from 1.0182 francs, and fell to 1.0553 Canadian dollars from 1.0714 late Friday.