US dollar starts the year under pressure over account deficit

The dollar began the year under renewed pressure Friday on worries about the American current account deficit, although strong US economic data offered a little assistance to the struggling currency.

The euro stood at US$1.2590 against US$1.2591 late on Wednesday in New York, virtually all world markets having been closed on Thursday.

The dollar was being traded at ¥106.95 from ¥107.22 on Wednesday.

Earlier in the week, the euro had pushed through both the US$1.25 and US$1.26 marks for the first time in its five-year history, peaking at US$1.2648 during Wednesday before slipping back.

The euro's recent series of all-time bests against the dollar has been fuelled by deepening concern about the US current account and budget deficits, as well as ultra-low US interest rates and fears about terrorism and the possible spread of mad cow disease.

Nothing had changed thus far this year, analysts said.

"The main theme continues -- US dollar weakness and continued difficulties faced by the world's largest economy in financing its huge current account deficit," said Mark McFarland, currency strategist at UBS.

The euro received a fresh boost early Friday after a monthly eurozone purchasing managers' index for the manufacturing sector rose in December against the previous month, although by less than expected.

Meanwhile the pound hit an 11-year best against the US currency as strong British manufacturing data and near-record consumer credit figures increased expectations of another interest rate rise by the Bank of England in the near future.

Overall, trade was very slow on Friday, with Japanese markets remaining closed until next week and many European and US traders taking an extended New Year break.

The euro was changing hands at US$1.2590 from US$1.2591 late on Wednesday in New York, ¥134.67 (¥135.03), £0.7027 (£0.7048) and 1.5598 Swiss francs (Sf1.5590).

The dollar stood at ¥106.95 (¥107.22) and 1.2386 Swiss francs (Sf1.2390).

The pound was at US$1.7916 (US$1.7853), ¥191.59 (¥191.48) and 2.2187 Swiss francs (Sf2.2120).

On the London Bullion Market, the price of an ounce of gold stood at US$415.25, against US$415.25 late Wednesday.