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Dollar gains on euro following U.S. economic report

Dollar gains on euro following U.S. economic report

The dollar edged higher against the euro Thursday after a report showed the U.S. economy grew at its strongest pace in more than a year.
The 13-nation euro fell to $1.3637 in late New York trading from $1.3645 late Wednesday. The British pound dropped to $2.0135 from $2.0151.
The U.S. Commerce Department said gross domestic product, the broadest measure of economic health, had expanded at an annual rate of 4 percent in the April-June quarter. That was significantly higher than the 3.4 percent rate the government initially estimated a month ago, but slightly lower than many analysts anticipated.
The growth spurt could be short-lived, however. Concerns persist that the recent turmoil in financial markets, a result of a spreading credit crisis, could seriously dampen economic activity in the second half of this year.
In a discouraging sign about Americans' spending power, the Labor Department reported Thursday that U.S. jobless claims rose last week to the highest level since April.
On Wednesday, Federal Reserve Bank Chairman Ben Bernanke noted that the bank was "prepared to act as needed" to ensure credit market troubles did not expand further, fueling speculation that a U.S. interest-rate cut could be in the offing next month from the current level of 5.25 percent.
Investors will look for further hints on Friday, when Bernanke is scheduled to speak at the central bank's annual conference in Jackson Hole, Wyoming.
Analysts also have raised doubts about prospects of the European Central Bank raising its key refinancing rate to 4.25 percent next month, following mounting problems with credit availability.
Higher interest rates, used to combat inflation, can strengthen a currency by giving investors higher returns on investments denominated in it.
The dollar rose against the Japanese currency, climbing to 115.74 yen from 114.88 after Vice Finance Minister Horoki Tsuda said the ministry would keep a close eye on financial markets and subprime mortgage concerns.
In other New York trading, the dollar bought 1.2027 Swiss francs, up from 1.1990 late Wednesday, and 1.0586 Canadian dollars, down from 1.0607.


Updated : 2021-08-06 11:46 GMT+08:00