Positive news on US jobs, manufacturing help pull dollar off 5-month low against euro

Thursday, September 30, 2010

Dollar rises from 5-month low after jobs report

NEW YORK — Positive news Thursday on U.S. jobs and manufacturing helped pull the dollar off its latest five-month low against the euro.

While Europe’s debt troubles are once again a worrisome issue, the euro has risen strongly against the dollar this month because investors expect that the Federal Reserve might take further action to boost the U.S. economy, which would also lead to lower interest rates and possibly weaken the dollar.

On Thursday morning, however, a U.S. government release suggested that employers are slowing job cuts, while a strong report on manufacturing in the Chicago area reassured investors who expected a slowdown in the industrial sector.

That helped boost the dollar. Investors hoped that better news on the economy could limit the Fed’s need to support the economy further by buying up large amounts of government debt, said Ashraf Laidi, chief market strategist at CMC Markets in London.

In late afternoon trading in New York Thursday, the euro traded at $1.3643, unchanged rom its value late Wednesday. Earlier in the day, the euro notched a five-month high at $1.3683. The euro had gained despite a big increase in Ireland’s bailout of its troubled banking system and a downgrade of Spanish government debt by Moody’s Investor Services. The European currency has risen about 7 percent versus the dollar this month, an usually large swing.

The British pound dropped to $1.5716 from $1.5795, while the dollar fell to 83.40 Japanese yen from 83.62 yen. The dollar is not far off its 15-year low of 82.88 yen struck earlier this month, just before the Bank of Japan intervened in foreign exchange markets to weaken the yen.

In other trading Thursday, the dollar dropped to 1.0279 Canadian dollars from 1.0305 Canadian dollars, but rose to 0.9816 Swiss francs from 0.9768 Swiss francs.

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