Euro close to new low against dollar

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The Independent Online

THE EURO tumbled to within a cent of its all-time low against the dollar yesterday, as the markets focused on the latest strong economic news in the US.

THE EURO tumbled to within a cent of its all-time low against the dollar yesterday, as the markets focused on the latest strong economic news in the US.

The single currency fell to 89.69 cents, its lowest for 11 weeks and close to its record low of 88.52 cents. The euro also fell against the yen as speculation rose that Japan is poised to raise rates for the first time in a decade.

The dollar benefited from figures yesterday showing that workers' productivity rose at its fastest pace for 17 years. This showed the economy could accommodate strong growth without triggering inflation - "very dollar positive," one analyst said.

The euro fell more than 1 per cent against the yen, dropping below ¥97 to its weakest since late May. The yen rose across the board after Masaru Hayami, the central bank governor, hinted at a rate hike later this week. "People don't like their long euro positions and don't want to wait until Friday to offload them," a dealer said.

The euro held to its 11-week low against the pound, but sterling fell below $1.50 as traders said the Bank of England's Inflation Report was not as hawkish as expected.

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