* Dollar rebounds but still suffers worst week since 1985
* Euro gains more than 5 percent vs dollar on week
* Euro zone industrial output falls, trimming euro gains
* ECB under pressure to follow Fed, other central banks (Recasts, adds comment, updates prices, changes byline)
By Steven C. Johnson
NEW YORK, March 20 (Reuters) - The dollar rebounded on Friday but still recorded its biggest weekly slide since 1985 as the Federal Reserve's plans to buy long-term government debt stoked fear about the erosion of the U.S. currency.
The Fed shocked financial markets this week when it said it would buy some $1 trillion of government and mortgage-backed debt in a bid to cut interest rates and kick-start lending.
Anticipating an oversupply of dollars, traders sold the greenback broadly. The euro hit a two-month high above $1.37 en route to its biggest daily gain since its 1999 launch.
The dollar clawed back some of its losses on Friday, but against a basket of currencies.DXY it still notched its biggest weekly plunge since the 1985 Plaza Accord, when major economies agreed to a formal depreciation of the greenback
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