Tags: Dollar

Dollar Surges to Four-Year High Against the Euro

Friday, 04 Jun 2010 04:08 PM

The dollar surged to its highest level against the euro in more than four years Friday as a report showed hiring in the U.S. remains weak, while a Hungarian official's warning about the state of his country's economy deepened anxiety over Europe's debt crisis.

The euro sank as low as $1.1956, its weakest level since it bought $1.1920 in March 2006 and well below the $1.2182 it bought in New York late Thursday.

A break of $1.20 prompted a new wave of selling, said Marc Chandler of Brown Brothers Harriman in New York.

"At this point, the market is looking for excuses to take the (euro) back to the original launch rate of 1.18 (against the dollar) with increased talk of eventual parity a year or two out," Michael Woolfolk of Bank of New York Mellon wrote in a note to investors.

The euro has weakened on worries about Europe's growth prospects and the effects of government spending cuts as indebted European countries try to get their budgets back in line with European Union mandates. The head of the European Trade Union Confederation warned Friday that budget cuts are going too far and could trigger an economic depression.

Peter Szijjarto, the spokesman for Hungary's new prime minister, said the country's economy is in a "grave" situation but the government is ready to avoid a crisis like the one being faced by Greece, which was bailed out by the European Union. Spain and Portugal are also struggling.

Hungary is a European Union member but doesn't use the euro. It already received a bailout of 20 billion euros from the International Monetary Fund and others in 2008 to help it avoid a default on its loans.

Europe's debt woes dominated talks at the Group of 20 summit. Finance chiefs worked to craft an agenda for keeping the global recovery on track and fending off future crises, sidestepping conflicts to present a united show of support for Europe's $1 trillion bailout.

In the U.S., the Labor Department said Friday that 431,000 jobs were created last month, below expectations and mostly reflecting temporary census hiring by the government. Private payrolls grew at the slowest pace since the start of the year.

Weak U.S. economic data can increase investors' appetite for safer assets like the dollar.

The British pound slid to $1.4459 from Thursday's level of $1.4633. Britain's biggest mortgage lender said Friday that house prices fell by 0.4 percent during May.

The dollar jumped to 1.0601 Canadian dollars from 1.0418 Canadian dollars even as Statistics Canada said the country added more jobs than expected in May, the fifth straight monthly increase.

In other late trading, the dollar rose to 1.1617 Swiss francs from 1.1549 francs, but fell against the Japanese yen, also a traditional safe haven. The dollar bought 91.51 yen, compared with 92.68 yen late Thursday.

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The dollar surged to its highest level against the euro in more than four years Friday as a report showed hiring in the U.S. remains weak, while a Hungarian official's warning about the state of his country's economy deepened anxiety over Europe's debt crisis.The euro sank...
Dollar
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2010-08-04
Friday, 04 Jun 2010 04:08 PM
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