Herb Ninja

U.S. Dollar Falls to New Low Against the Euro As European Currency Passes $1.34 Mark

12-03-2004 | Tony Czuczka | Yahoo

BERLIN (AP) -- The U.S. dollar fell to another new low against the euro Friday, pushing the European currency higher than $1.34 after U.S. employment data came in weaker than expected.
In late trading in New York, the euro was quoted at $1.3452. The previous record was set Thursday, when the European currency shared for nearly five years by a dozen nations hit $1.3383. The dollar also fell against the Japanese yen, trading at 102.09 yen late Friday, down from 103.19 yen late Thursday.

After a slight dollar recovery, traders seized on disappointing U.S. job creation numbers to send it back to new lows, said Mark Austin, a currency analyst at HSBC in London. "There doesn't seem to be any end to it," he said.

The U.S. government reported Friday that employers pulled back on hiring as they headed into the holiday shopping season, adding just 112,000 new jobs overall in November. It was the weakest gain in five months and just more than half of what economists had forecast.

Since last Friday, when it first briefly hit the $1.33 mark, the euro has risen about 1.2 percent against the dollar, hitting new highs throughout the week. As officials around the globe voice their concern over the dollar's slide, intervention remains a possibility.

On Thursday, Japanese Finance Minister Sadakazu Tanigaki called the dollar's dip below 102 yen "rather rapid," and vaguely hinted at possible coordinated intervention among Japanese, European and American officials.

European Central Bank President Jean-Claude Trichet has called the euro's steep climb "brutal" and "unwelcome."

The euro has shot up from $1.20 since September over persistent concerns about the U.S. trade and budget deficits and signals from the Bush administration that it would not step in to stem the tide.

A low dollar has been good for U.S. exports by making American products cheaper abroad, but world leaders outside the United States are worried that the rapid rise is hurting their exports.

"It'll increase pressure on the Europeans, but the appetite for intervention appears to be severely limited," Austin said. "So it's difficult to see the dollar reversing any time soon."

Meanwhile on Friday, the pound strengthened against the dollar, rising to $1.9418 in late New York trading from $1.9231 Thursday. The dollar dropped against the Swiss franc to 1.1312 from 1.1512, and against the Canadian dollar to 1.1900 from 1.1925.

U.S. Treasury Secretary John Snow reaffirmed the country's dollar policy Friday on the cable network CNBC, but would not comment on the currency's direction or the possibility of market intervention.

"As I've said many times, no country can devalue itself to prosperity," Snow said. "And, our policy is to sustain the strong dollar. The strong dollar based on the fundamentals of this economy."

The 12-nation euro initially fell against the dollar after its 1999 debut, but it has risen some 63 percent since bottoming out at 82 U.S. cents in October 2000.

The Japanese yen, British pound and other currencies have also been making dramatic gains on the dollar as corporations and long-term investors seek to diversify their assets now that sentiment has turned against the U.S. currency.

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Zilos

Canadian Dollar is doing great too, was at $0.85 US, now down to $0.823, which is still a 11 year high.

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^_^truth

It just goes to show that when countries work together, economicly, they can over take even the "dominate" country.

I can only hope that pretty soon the U.S. realizes there is no way to compete with a multi-country currency and decides to make a currency with the entire western hemisphere (who knows in my life time we could all convert to the Wobble (world dollar ).

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HappyMan

This is as bad, maybe worse, for Europe. Most European countries have marginal economic growth; higher costs may bring Europe into a recession.

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Hiz Highness

I don't think the fact that the Euro has more buying power than a dollar is going to throw them into an economic recession. Why do you think it will?

-HH

HappyMan

It's not buying power that matters, it the cost of business. European services and manufactured goods are now more expensive for global consumers.