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Euro rises above $1.30 as worried investors eye US

Euro rises above $1.30 as worried investors eye US

The euro rose Friday to its highest level in two months, topping $1.30 as worried investors shift their focus from the European debt crisis to slowing growth in the U.S.
The dollar got a huge boost this year as European governments said their debts were swelling, triggering concerns about the effect of defaults on European banks and slashed government spending on weak economies. But easing concerns about a banking crisis in Europe, coupled with declining interest rates in the U.S., are now weighing on the dollar, said Ashraf Laidi, the chief market strategist at CMC Markets in London.
The euro climbed as high as $1.3007 Friday before settling back to $1.2969 in morning New York trading. The euro hasn't touched $1.30 since May 10. It was worth $1.2897 late Thursday.
The 16-nation currency has risen about 8 percent from a four-year low below $1.19 in early June as investors watch successful bond auctions in Greece, Portual and Spain, countries under intense scrutiny this year because of their big budget deficits and weakening economies.
"Poor U.S. economic data and more benign news streams from Europe continue to fuel the euro's recovery," wrote Brown Brothers Harriman currency analysts in a research note.
News of a more pessimistic U.S. outlook from the Federal Reserve was followed Thursday by reports that manufacturing activity is slowing. Manufacturing had been the bright spot of the U.S. recovery.
On Friday, the Labor Department said the prices consumers pay dropped in June, the third straight decline. Falling prices will prevent the Federal Reserve from raising rates from their current record low near zero. Higher rates would make the dollar a more lucrative investment.
Instead, as U.S. investors seek safety in government debt, bond yields are declining. That makes investing in the dollar a less attractive option than in currencies in countries whose debt has higher yields.
In other trading Friday, the British pound dropped to $1.5369 from $1.5413, while the dollar fell to 86.64 Japanese yen from 87.46 yen. The dollar dipped to 1.0428 Swiss francs from 1.0434 francs, but rose to 1.0475 Canadian dollars from 1.0380 Canadian dollars.


Updated : 2021-03-06 08:06 GMT+08:00