UPDATES ON AUG 21 2008

AUG 21 THURSDAY

Dollar Falls on U.S. Manufacturing Slump, Credit-Market Losses .

The dollar fell against the yen on speculation a manufacturing

industry contraction and credit- market losses will

prompt the Federal Reserve to hold off from raising

interest rates.

The U.S. currency also slid against the euro on concern futures

traders will pare bets on gains in the dollar, which has gained

against all 16 of the most-active currencies this month.

The Australian and New Zealand dollars rose as

commodity prices rallied for a third day, helping boost

the value of the two nations' exports.

The dollar fell to 109.61 yen as of 1:35 p.m. in Tokyo from

109.86 in New York yesterday. It also declined to

$1.4774 per euro from $1.4747 yesterday, when it

climbed 0.2 percent. The euro was at 161.91 yen

from 162.03. It reached 160.87 on Aug. 19, the

lowest level in three months.

The Australian dollar rose to 87.26 U.S. cents from 86.90

cents late in Asia yesterday. New Zealand's dollar

advanced to 71.37 U.S. cents from 70.99 cents.

The U.S. currency has gained 7.7 percent versus the euro

since touching an all-time low of $1.6038 on July 15 and

appreciated 1.6 percent this month against the yen. The

greenback advanced as reports showed the European

and Japanese economies shrank in the second quarter

and crude oil fell more than 20 percent from the record

$147.27 a barrel reached July 11.

Futures traders are betting for the first time since March

2007 that the dollar will rise against the euro, yen and British

pound. There were 24,060 more wagers by hedge funds and

other large speculators on a gain in the dollar than on a

decline on Aug. 12, data from the Washington-based

Commodity Futures Trading Commission showed

Aug. 15. A week earlier there were 20,886 more bets

on dollar weakness.

Crude oil today increased 0.7 percent to $116.36 a barrel.

The euro-dollar exchange rate and oil had a correlation

of 0.9 in the past year, according to Bloomberg

calculations based on their value changes. A reading of 1

would mean they move in lockstep.

The U.S. currency also weakened on speculation credit-

market losses in the U.S. will deepen. Fannie Mae and

Freddie Mac shares tumbled in New York trading to

the lowest levels since at least 1990 as speculation

increased that the U.S. Treasury will have to bail

out the mortgage-finance companies.

Futures on the Chicago Board of Trade show an 18 percent

chance the U.S. central bank will raise the 2 percent target

rate for overnight lending between banks by at least a

quarter- point by its Dec. 16 meeting, down from 34

percent odds a week earlier. Policy makers next

meet Sept. 16.