Greenback Gets Hammered

Updated from 9:35 a.m. EST

The U.S. dollar was getting hammered Wednesday and sinking to a new all-time low against the euro after a Chinese official said his nation might start moving more of its foreign currency holdings away from the greenback.

Recently, the euro was worth $1.4691, up nearly 1% from $1.4552 in the prior session. Thus far this year, the European common currency has gained 11% on its American rival.

"The market is likely to see this [news from China] as an indication that the pace of reserve diversification might be increasing," notes a recent research report from the foreign-exchange team at Barclays Capital in London.

"Reserve diversification by Asian central banks away from the U.S. dollar has been a slow-burning negative for the currency for several years."

Among the majors, the best single-session performer was the Swiss franc, which was jumping nearly 1.4% against the dollar. The Australian dollar and the Canadian dollar were each gaining about 1% vs. the U.S. currency.

The Canadian dollar has now appreciated 20% against its southern counterpart this year, buoyed by rising prices for metals and energy produced in the resource-rich economy.

Elsewhere, the yen surged to 113.18 from 114.56 a day earlier, a 1.2% increase, and the pound rose to $2.1038 from $2.0868, up 0.8%.

The British pound was recently selling for $2.1044, up from $2.087 in the last session. The currency has rallied from around $1.96 at the beginning of the year.

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