Dollar slides on upbeat corporate earnings

NEW YORK — The dollar hit its lowest level against the euro in nearly seven months as prospects of a deal to rescue U.S. lender CIT and optimism about corporate earnings increased investors’ appetite for risk — driving them from the safety of the American currency.

Toy maker Hasbro Inc., oilfield services company Halliburton Co. and auto parts and building products maker Johnson Controls Inc. all reported earnings that beat expectations.

Markets already were relieved that second-quarter results from many major American companies have turned out better than expected. Reports this week from American Express, Boeing, and Caterpillar, among others, will likely to provide more clues about any rebound in the world’s largest economy.

Gains in equity markets have helped weaken demand for the dollar lately as investors exit the traditional haven of the U.S. currency.

“Stock market exuberance over better-than-expected corporate earnings has erased interest in the safe-haven greenback,” Michael Woolfolk, senior currency strategist at Bank of New York, wrote in a client note.

In late trading Monday, the 16-nation euro jumped to $1.4221, it’s highest point since late December, from $1.4139 late Friday. The British pound climbed to $1.6533 from $1.6382, while the dollar was barely changed at 94.23 Japanese yen compared with 94.24 yen late Friday.

News Monday that CIT Group Inc. struck a deal with its bondholders also helped stoke the market’s optimism. The Dow Jones industrials and the Standard & Poor’s 500 index are coming off their best weekly performance since a spring rally began in March.

Meanwhile, New York-based Conference Board’s index of leading economic indicators posted its third straight monthly increase, another sign pointing toward the recession ending later this year.

Investors will be watching closely as Federal Reserve Chairman Ben Bernanke gives his semiannual report on monetary policy to the House Financial Services Committee Tuesday.

“Zero interest rate policy in the U.S. has led to further (dollar) selling, with the greenback an attractive funding currency now for the carry trade,” Woolfolk said. “Questions remain over the timing of the withdrawal of quantitative easing measures.”

In other late trading Monday, the dollar slipped to 1.0693 Swiss francs from 1.0746 francs late Friday, and fell to 1.1070 Canadian dollars from 1.1163.