Sun, Dec 21, 2003 - Page 10 News List

Euro falls from its dizzy heights as traders take profits

AFP , LONDON

The euro came off its new all-time highs in late London trade Friday as profit taking and position squaring set in, dealers said.

The single European currency stood at US$1.2383 against US$1.2428 late on Thursday, when the euro hit a new record high of US$1.2439.

The dollar traded at ¥107.88 from ¥107.54 on Thursday.

With precious little on the data front and the thinning out in activity ahead of the Christmas season, it is hardly surprising that position squaring has emerged, said Julian Jessop, analyst at Standard Chartered.

Analysts noted that the euro's rise to new levels not seen since its launch in January 1999 came despite fresh shoots of recovery in US economic data.

The US currency continued to be plagued by concerns about the ballooning US current account and budget deficits, they said.

The euro's rise in recent weeks has been meteoric, with the single currency setting 13 highs in 15 sessions. The pound, too, notched up good gains on the dollar, setting a series of 11-year highs.

Stronger-than-expected eurozone trade data had little impact, analysts said.

But it has been generally true that economic data has failed to influence the markets by much recently. Strong US data in particular has been dismissed by a market more focused on the large US current account deficit.

In the past week, the euro has gained 1.2 percent against the dollar while the pound has appreciated by 1.4 percent -- representing the fifth consecutive week of strong gains for both currencies, Credit Suisse First Boston analysts said.

They expect the dollar's woes to continue into the new year with the euro set for levels around US$1.27 and the pound for US$1.80.

The euro was changing hands at US$1.2383 from US$1.2428 late on Thursday in New York, ¥133.56 (¥133.64), £0.7003 (£0.7007) and 1.5552 Swiss francs (Sf1.5526).

The dollar stood at ¥107.88 (¥107.54) and 1.2563 Swiss francs (Sf1.2493).

The pound was at US$1.7676 (US$1.7732), ¥190.66 (¥190.68) and 2.2202 Swiss francs (Sf2.2151).

On the London Bullion Market, the price of an ounce of gold stood at US$409.75 against US$407.50 on Thursday afternoon.

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