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Dollar sinks against euro, pound as oil skyrockets, US unemployment hits 5.5 percent

Dollar sinks against euro, pound as oil skyrockets, US unemployment hits 5.5 percent

The dollar plunged against the euro and the pound Friday after a leap in U.S. unemployment and as oil rose to above $139 a barrel.
The 15-nation euro rose to $1.5768 in late New York trading, up from the $1.5593 late Thursday.
On Friday, the Labor Department reported that the unemployment rate rose to 5.5 percent in May from 5 percent in April. It is the biggest monthly jump since February 1986.
Oil, which surged more than $11 to touch a record above $139 Friday, also hurt the greenback. Investors have been using oil as a hedge against a slumping dollar, and as the price of the commodity rises, its inflationary pressures can make traders even more skittish on the dollar.
A small dollar rally against the euro earlier this week, brought on by Federal Reserve Chairman Ben Bernanke's statement of support for a strong dollar, was quickly reversed Thursday after ECB President Jean-Claude Trichet suggested the bank might raise interest rates at its next meeting citing inflationary concerns. At Thursday's meeting, the bank left its key rate unchanged at 4 percent.
Higher rates can fight inflation and also support a currency, while lower interest rates can force down a currency as investors seek higher-yielding assets.
The British pound also soard to $1.9713 from $1.9596, while the dollar dropped to 105.10 Japanese yen from 105.64 late Thursday.
"The triple blow to the U.S. dollar over the past 24 hours has not only defused the dollar's rally, it has players talking about renewed dollar decline," wrote Bank of New York Mellon currency strategist Michael Woolfolk in a research note, even as he noted that Bernanke's speech Tuesday had indicated further rate cuts were unlikely, while a U.S. interest-rate hike could be in store by the end of the year.
The dollar has slumped throughout the year as the Fed cut its federal funds rate seven times since September in an effort to spark the U.S. economy, to 2 percent.
In other New York trading, the dollar fell to 1.0202 Swiss francs from 1.0373 francs, but gained to 1.0196 Canadian dollars from 1.0184.


Updated : 2021-05-18 04:32 GMT+08:00