Tags: Dollar

Euro Rises to Six-Week High Against US Dollar

Friday, 02 Jul 2010 10:31 AM

The euro rose Friday to its highest level since late May against the dollar after a report showed U.S. employers cut jobs last month, intensifying worries about the U.S. economy, while concern about the European financial crisis ebbed.

The jobs report showed the economy lost 125,000 jobs in June, the first decline in six months. Most of the job losses came from the federal government laying off temporary census workers, and the private sector did add jobs. But the overall drop in jobs fit in with other recent data suggesting a slowdown in the recovery from the recession in the second half of 2010.

"The number itself does cast further doubt about the U.S. recovery," said Brian Dolan, chief currency strategist at Forex.com. He noted, however, that trading on holiday weekends is typically very thin, exacerbating moves in markets. The Fourth of July is this weekend.

The euro, used by 16 European countries, rose to $1.2591 in morning trading in New York from $1.2480 late Thursday. Just after the Labor Department said that 125,000 jobs were lost last month in the U.S., the euro peaked at $1.2613, its highest point since May 21.

The euro hit a four-year low below $1.19 on June 7. The common currency has been suffering this year, dropping about 15 percent, because economic growth in Europe is expected to stagnate after deep cuts in government spending. European countries are trying to get budget deficits and public debt in line with European Union rules.

But the euro has recouped some of its losses recently as investors' became less worried about the debt crisis hurting banks' balance sheets. The European Central Bank suggested that banks' cash needs are easing, fewer banks than expected signed up for loans from the ECB. Spain and France also raised money in successful debt auctions, despite a downgrade of Spanish debt by Moody's Investors Service.

"Investors braced for the worst from the eurozone risk events are now relieved that the worst didn't come to pass," said UBS currency analyst Geoffrey Yu. He still recommends selling the shared European currency.

Other trading was mixed. The British pound rose to $1.5180 from $1.5152, while the dollar rose to 87.74 Japanese yen from 87.53 yen and to 1.0641 Swiss francs from 1.0630 francs.

The dollar edged up to 1.0605 Canadian dollars from 1.0600 Canadian dollars.

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