Investors See Dollar Rising a Second Week

The dollar may rise against the euro for a second week, according to a majority of investors surveyed by Bloomberg News.

Seventy-one percent of the 48 strategists, traders and investors polled Friday favored the dollar against the euro -- a reversal from the 84% who last week recommended the opposite strategy.

Respondents made their calls after officials including European Central Bank President Jean-Claude Trichet and German Chancellor Gerhard Schroeder expressed concern that the euro’s advance might slow the pace of the region’s economic recovery.

The officials may repeat those remarks this week, said Harriett Richmond, who oversees about $50 billion as head of currency management at J.P. Morgan Fleming Asset Management in London.

“The euro has probably peaked for a couple of months,” Richmond said. “Until now, the Europeans have just been lying back and taking it.”

The dollar strengthened to $1.2394 per euro at 5 p.m. Friday in New York, the highest level since Dec. 22. The U.S. currency gained about 3.4% last week, for the first weekly rise in more than two months.

Demand for the dollar may be spurred by an easing of concerns about the attractiveness of investing in the U.S., said John Rothfield, a currency strategist at Bank of America Corp. in San Francisco.

A Treasury Department report Friday showed that foreigners bought $87.6 billion in U.S. financial assets in November, more than triple the October level and 20 times higher than in September, when it declined to $4.3 billion, the lowest level since 1998.

September’s figure sparked concern that the lowest U.S. interest rates in four decades were discouraging some foreign investors from buying debt sold to finance a record budget deficit. The U.S. also has a shortfall in its current account, the broadest measure of trade and investment, which in the July-to-September quarter was the third largest ever.

“The U.S. trade balance situation is gradually improving, which will help the dollar,” said Rothfield, who predicted that the currency would strengthen to $1.18 per euro by year’s end.

The dollar began its recovery from a nine-week losing streak last Monday when Trichet, after conducting a meeting of central bankers, said “brutal” moves in the euro weren’t welcome. ECB Chief Economist Otmar Issing then said he was “worried about great swings” in the currency. French Finance Minister Francis Mer urged Group of 7 finance ministers to discuss the euro’s strength at a Florida meeting next month.