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Sun, Nov 26, 2006 - Page 10 News List

Euro turns around at US$1.30-level in volatile trading

AFP AND CNA , NEW YORK AND TAIPEI

The euro soared against the dollar on Friday in volatile trading which saw the euro surpass the US$1.30-mark, hitting the highest level against the US currency since April last year, traders said.

The euro was changing hands at US$1.3094 at 7pm GMT, up from US$1.2948 late on Thursday, but off an earlier high of US$1.3109; the euro's highest mark against the dollar since April 21 last year.

The euro also hit fresh highs against the Japanese yen, rising to ¥151.74, compared with ¥150.47 a day earlier.

The dollar meanwhile was quoted at ¥115.59, down sharply from ¥116.25 late on Thursday, and its lowest level against the yen since December 2004.

The US dollar rose against the New Taiwan dollar on the Taipei Forex Inc on Friday, gaining NT$0.043 to close at NT$32.833.

A total of US$898 million changed hands during the day's trading.

The US currency opened at NT$32.790 and fluctuated between NT$32.780 and NT$32.845.

Traders said the US dollar had slumped heavily on the foreign exchange markets for several reasons. Some market-watchers said technical factors, such as a wave of automatic dollar selling orders that were executed when the euro broke through the US$1.31 level, had been partly responsible.

Others cited concerns about prospects for the US economy. Growth in the world's largest economy slowed to an annual pace of 1.6 percent in the third quarter from 2.6 percent in the second and a blistering 5.6 percent clip in the first.

The US economy has slowed markedly in recent months amid a widespread housing market downturn.

"Having now reached these august levels the question facing the market is ... what's next?" said Boris Schlossberg, a senior currency strategist at Forex Capital Markets.

"Although, much like a snowball rolling down a mountain, these momentum rallies can take a life of their own, we suspect that after some sober post holiday analysis the markets may conclude that this move is a bit overdone," Schlossberg said.

Many US traders were not at their desks on Thursday because of the Thanksgiving public holiday, and many took Friday off work as part of an extended break.

In late New York trade, the US dollar stood at 1.2091 Swiss francs from SF1.2237.

The pound was being traded at US$1.9319, up from US$1.9154 a day ago.

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