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Dollar slides as China affirms support for Europe

Dollar slides as China affirms support for Europe

The dollar retreated Thursday after China said it has no plans to sell European debt it holds.
The euro, which has been battered by worries about Europe's debt crisis, climbed to $1.2378 in late New York trading compared with $1.2204 late Wednesday. Earlier in the session, the euro neared the four-year low of $1.2146 that it reached last week.
The euro has dropped about 15 percent against the dollar this year as traders take a dimmer view of Europe's prospects and the strangling effect of deep government spending cuts. Indebted European countries are cutting spending to get their budgets back in line with European Union mandates.
The agency that manages China's $2.5 trillion in foreign reserves denied a Financial Times report that China was considering cutting its exposure to European debt.
Also Thursday, Spain's Parliament approved emergency austerity measures to cut the country's soaring deficit. The package, which includes a cut in civil servants' salaries, aims to reduce spending by 15 billion euros this year and next.
Spain is the No. 4 economy in the 16-nation euro monetary union.
The news from China and Europe overshadowed disappointing reports about the U.S. economy. The Labor Department said initial claims for unemployment benefits last week did not fall by as much as economists had expected. A report on gross domestic product indicated that the U.S. economy did not grow as fast in the first quarter as previously thought.
The euro could jump in the next day as investors square up positions and take profits before the upcoming holiday weekend, but euro selling could very well resume next week, said Michael Woolfolk of Bank of New York Mellon.
In other late trading Thursday, the British pound rose to $1.4588 from $1.4420 late Wednesday. The dollar edged up to 90.84 Japanese yen from 90.12 yen and slipped to 1.1504 Swiss francs from 1.1593 francs.
The dollar dropped against currencies from countries that are big commodity exporters, which tend to gain as traders opt for riskier bets.
The dollar slid to 1.0505 Canadian dollars from 1.0636 Canadian dollars and fell against the Australian and New Zealand dollars, the Scandinavian currencies and the Brazilian real.


Updated : 2021-05-14 01:55 GMT+08:00