Ongoing bad economic data as well as rising oil prices related to geo-political tensions are driving the U.S. dollar down, as it fell against most major currencies on Thursday.
Oil prices have had a direct impact on the strength or weakness of the dollar, as its recent strength correlated with dropping oil prices, and the increase in oil prices is now again putting downward pressure on the greenback.
"The sharp drop in crude prices single-handedly triggered the sharp dollar rally between July and mid August. Now that oil prices are creeping higher once again, it would only make sense to see the U.S. dollar slip as well," wrote Kathy Lien, director of currency research at GFT, in a note to clients.
A report from the Conference Board added pressure to the dollar, as leading economic indicators dropped by 0.7 percent in July, raising the possibility that the economy could flatten out for the rest of 2008.
Manufacturing in the northeast U.S. also continues to drop for the ninth month in a row, although it did slow down in its contraction so far in August, according to the Federal Reserve Bank of Philadelphia.
Continuing problems in the finance and mortgage industry are also keeping pressure on the dollar, as concerns over Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE), and other financial institutions aren't letting up.
Reports that Lehman Brothers (NYSE:LEH) held secret negotiations to sell up to have the shares in the company to Asian concerns didn't help spark confidence in the sector.