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Euro hits new all-time high vs US dollar on more weak economic news from Washington

Euro hits new all-time high vs US dollar on more weak economic news from Washington

The 13-nation euro jumped to a new record on Thursday against the U.S. dollar, breaking through the US$1.43 mark after Washington reported a spike in jobless claims _ the latest in a spate of bad economic news from the United States.
The euro rose to US$1.4305 in early afternoon trading in Europe after the U.S. Labor Department reported that applications for jobless benefits hit 337,000 last week _ up 28,000 from the week before and the biggest one-week surge since claims jumped 42,000 in the week of Feb. 10.
The euro settled back slightly to US$1.4290 _ still up more than a U.S. cent from the US$1.4186 it bought in late New York trading on Wednesday, and higher than its previous record of US$1.4282 set Oct. 1.
The jobless increase was four times the gain of 6,000 that economists had been expecting and was taken as a possible sign that the labor market is starting to weaken under the impact of a severe downturn in housing and the credit crisis that jolted financial markets in August.
Earlier this week, both Treasury Secretary Henry Paulson and U.S. Federal Reserve Chairman Ben Bernanke warned that the housing crisis was likely to last longer than had been expected.
Already on Wednesday, the U.S. Commerce Department said the construction of new homes and apartments plunged to a 14-year low in September, while the National Association of Home Builders' survey of builder confidence plunged in early October to the lowest level ever recorded in the 22-year history of the survey.
Analysts still believe the economy will be able to avoid a recession because they think the Federal Reserve, which cut interest rates for the first time in four years in September, will reduce rates again should conditions weaken further.
That has helped drive the dollar down against other major currencies, however, because even though lower interest rates can jump-start the economy, they can weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns.
The dollar previously hit lows against the euro, after the Federal Reserve last month lowered interest rates by a larger-than-anticipated half percentage point. Amid speculation that another cut could follow, the euro reached an all-time high of US$1.4282 on Oct. 1.
In other trading, the British pound climbed to US$2.0481 from US$2.0355 in New York on Wednesday, while the dollar slipped to purchase 115.48 Japanese yen from 116.55 the day before.


Updated : 2021-10-19 09:42 GMT+08:00