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Dollar falls as ECB cuts rates,

Dollar falls as ECB cuts rates,

The dollar fell against the euro, pound and yen Thursday after the European Central Bank cut its benchmark rate to 2 percent and financial-sector anxieties and more grim unemployment news weighed on Wall Street.
The British pound rose to $1.4659 in late New York trading from $1.4587 late Wednesday. The euro inched up to $1.3163 from $1.3159, but earlier traded at $1.3024, its lowest point since Dec. 11. The dollar also rose to 89.68 Japanese yen from 89.13.
The ECB cut its benchmark refinancing rate by half a percentage point to 2 percent, in line with expectations. Lower interest rates can weigh on currencies as investors seek higher returns elsewhere.
The ECB's rate is still among the highest of major economies, but ECB President Jean-Claude Trichet implied that more incremental easing to as low as 1 percent was likely throughout 2009, said Ashraf Laidi, chief market strategist at CMC Markets in London.
Trichet said that "risks to economic growth remain clearly on the downside."
Last month, the Federal Reserve slashed its rate to a range of zero to 0.25 percent. The Bank of England cut its rate last week by half a percentage point to 1.5 percent, and more cuts are expected in spring, while Japan dropped its rate to 0.1 percent last month.
In the U.S., shares of Citigroup Inc. and Bank of America Corp. sank in early trading as talk swirled about BofA possibly needing fresh government aid on top of $25 billion in earlier infusions. JPMorgan Chase & Co. on Thursday reported a profit of $702 million in the fourth quarter, down by more than three-fourths from last year, while Deutsche Bank on Wednesday said it lost 4.8 billion euros ($6.3 billion) in the fourth quarter. As earnings season kicks off, Wall Street is nervous about other banks posting big losses and needing more rescue funds.
Later in the day, however, stocks rebounded and moved marginally higher as markets speculated about a Senate vote after the closing bell Thursday on whether to authorize use of the remaining $350 billion from the government's financial bailout fund. Investors were hoping additional money from Washington will help stabilize banks.
The Dow Jones industrial average ended up about 12.35 points at 8,212.49.
In other news, the Labor Department reported that Americans filing new claims for unemployment benefits rose to 524,000 last week from 470,000 the previous week, more than had been expected. Economists say more job losses are likely for the rest of 2009.
In other late New York trading, the dollar rose to 1.1220 Swiss francs from 1.1174 late Wednesday, and advanced to 1.2508 Canadian dollars from 1.2451.


Updated : 2020-12-05 10:08 GMT+08:00