Sun, Sep 09, 2007 - Page 10 News List

Dollar slumps on unexpected US jobs losses

AFP , NEW YORK

The US dollar slumped against other world currencies on Friday after a US government report revealed surprise job losses last month, suggesting a growth slowdown in the world's largest economy.

The euro and other currencies spiked higher against the dollar after the Labor Department released a monthly report showing US employers unexpectedly shed 4,000 jobs last month, marking the first drop in payrolls since August 2003.

The euro was changing hands at US$1.3769 at 9pm GMT, up sharply from US$1.3690 in New York late on Thursday. The European currency had earlier surged as high as US$1.3798 to its highest level since Aug. 9 as traders bought euros and dumped dollars.

The US dollar also tumbled against the Japanese yen, falling to ¥113.47, compared with ¥115.33 late on Thursday.

The US central bank has kept its key short term federal funds interest rate pegged at 5.25 percent since June last year, saying inflation remains its biggest concern.

But with evidence that the housing downturn is spilling over into the wider economy, market watchers say the Fed will have to trim rates to stimulate economic growth.

The euro was buoyed this week after the European Central Bank (ECB) decided on Thursday to keep eurozone borrowing costs unchanged amid financial market turmoil.

The ECB held its main lending rate steady at 4 percent, but indicated that it could raise borrowing costs in the future.

The Bank of England also held borrowing costs steady at 5.75 percent on Thursday, saying it was "too soon" to judge the full economic disruption caused by mounting US home foreclosures.

In late New York trading, the US dollar stood at 1.1881 Swiss francs, down from SF1.2015 late on Thursday. The pound was being traded at US$2.0287, up from US$2.0237 a day earlier.

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