Dollar fell on weak U.S. private-sector jobs report, worries from ECB President Trichet about euro zone inflation; while ECB widely expected to hike tonight, analysts say price pressure may even force Trichet to consider more rate increases later on; those expectations helped push euro to 10-week high of 1.5889 - not far from lifetime high of 1.6020. Data also showed Euro zone producer prices spiked to an 18-year high in May on surging energy prices, an indication Trichet's concerns over inflation are warranted.
Also keeping dollar down vs euro was ADP saying private sector jobs dropped 79,000 in U.S. in June, keeping traders braced for a weak official non-farm payrolls report, due tonight. Oil prices, which hit another record high, further weighed on dollar. Late in New York, EUR/USD 1.5880 vs 1.5785 late Tuesday, USD/JPY 105.98 vs 106.10, EUR/JPY 168.29 vs 167.42, GBP/USD 1.9910 vs 1.9938, USD/CHF 1.0141 vs 1.0201. Stocks slumped with Dow dragged down to bear market territory; high oil prices, credit concerns, weak economic data hurt auto, airline, financial sectors; General Motors plunged 15% to 9.98 - lowest level in 36 years - as Merrill Lynch cut rating, warned bankruptcy can't be ruled out. Dow down 1.5%, Nasdaq down 2.3%, Philly semicons off 2.2%. Treasurys rallied broadly, benefiting from weak ADP report, tumbling stocks and another record close in crude oil prices. 2-year yield down 5.3 bp at 2.59%, 10-year off 2.3 bp at 3.97. Nymex August crude rose $2.60 to record closing high of $143.57/bbl, then climbed to an all-time intraday high of $144.15/bbl. Uptick led by data showing U.S. crude stockpiles declined, diesel and heating oil inventories disappointed. Comex August gold rose $2 to $946.50/oz on high oil.
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