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Dollar rises against euro, pound

Friday, February 1, 2008

NEW YORK (AP) - The U.S. dollar rose Friday against the euro and the British pound, helped by rising stock prices and a modest expansion in the U.S. manufacturing sector despite a weak report on jobs.

In late New York trading, the dollar rose to $1.4803 per euro from $1.4877 per euro late Thursday. The dollar jumped to $1.9677 per British pound from $1.9900 per pound.

The dollar also inched up to 106.47 Japanese yen from 106.43 yen.

The dollar rebounded after an industry group reported U.S. manufacturing activity rose in January and helped galvanize Wall Street. The Institute for Supply Management said Friday its index of manufacturing activity rose to 50.7 from 48.4 in December. Wall Street had expected the figure would come in at 47, which would have indicated a contraction of the manufacturing sector.

The single European currency failed to reach a new high after the Labor Department reported earlier Friday that employers cut 17,000 jobs in January as the unemployment rate dipped to 4.9 percent from 5 percent. That sent a signal to currency investors that the euro may not have the legs to go much higher. It had risen nearly 6 U.S. cents since Jan. 22.

Once the euro fell below a previous technical resistance level around $1.4920, investors who were betting on more euro strength decided to give up their positions before the weekend, Carl Forcheski, vice president of foreign exchange at Societe Generale in New York, told Dow Jones Newswires.

The dollar sank to a record low of 1.0734 Swiss francs after the jobs report, according to Dow Jones' Interbank foreign-exchange rates, but recovered to 1.0888 Swiss francs by late afternoon in New York, above 1.0823 Thursday.

Worries about U.S. bond insurers, continuing fallout from the subprime mortgage crisis and a string of interest-rate cuts by the Federal Reserve have kept the dollar down.

The Fed lowered its benchmark rate to 3 percent on Wednesday, its second cut in eight days, putting it well below the euro zone rate of 4 percent and Britain's 5.5 percent.

Lower rates can help jump-start a country's economy, but at the same time weaken a currency as traders transfer funds to assets where they can earn higher returns.

In other New York trading, the dollar fell to 99.38 Canadian cents from 1.0040 Canadian dollars

Posted by MOHAMED SAID at 8:52 PM  

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