Sun, Jul 04, 2004 - Page 10 News List

Greenback under pressure from euro, weak US job data

AFP , LONDON

A far weaker than expected report on US job creation in June put the dollar under pressure here Friday against the euro.

The single European currency in late-day trade was at US$1.2305 against US$1.2158 late Thursday in New York.

The euro at one point rose to US$1.2312, its highest level since early last month.

The dollar was trading meanwhile at ¥108.61 after ¥108.35 on Thursday.

Not only did headline June non-farm payrolls in the US come in well short of forecasts, data for May and April were also revised down, raising fresh doubt on the outlook for the US economy.

The closely watched job creation indicator rose only 112,000, well below the 244,000 expected, while figures for May and April were shaved by 13,000 and 22,000 respectively.

"The dollar fell like a stone on the release, with the market showing a decided preference to be short dollars going into the long weekend," said Michael Woolfolk, senior currency strategist at the Bank of New York.

Notably, the dollar dropped more than one cent against the euro and pound.

There is now just about enough evidence to worry the market that the US economy may be coming off the boil, said Ray Attrill at the foreign exchange analyst 4Cast.

But with US markets closed tomorrow for Independence Day, trading was quiet and whatever movement there was had already been established, analysts said.

The dollar had started the day badly with markets unwilling to take on much risk going into the long weekend in the US.

Elsewhere, a sharp drop in the leading index of Tokyo shares put a drag on the yen while the pound drifted lower after a moderation in British house prices.

According to Halifax, house prices rose 1.2 percent in June -- the slowest increase since last November.

This appears to be "consistent" with other releases suggesting that the Bank of England's four quarter-point rate hikes since November is having the desired impact of slowing consumption, said Marc Chandler, chief currency strategist at HSBC Bank USA.

If this sort of data continues, the central bank may be persuaded to keep interest rates from rising too rapidly, analysts said.

The euro was changing hands at US$1.2305 from US$1.2158 late on Thursday in New York, ¥133.63 (¥131.74), £0.6723 (£0.6681) and 1.5177 Swiss francs (Sf1.5184).

The dollar stood at ¥108.61 (¥108.35) and 1.2333 Swiss francs (Sf1.2488).

The pound was at US$1.8297 (US$1.8190), ¥198.77 (¥197.10) and 2.2576 Swiss francs (Sf2.2720).

On the London Bullion Market, the price of an ounce of gold stood at US$397.75 from US$394.80 on Thursday afternoon.

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