Dollar rises against euro on weak European economic data

Business Materials 28 February 2009 04:24 (UTC +04:00)

The dollar rose against the euro and most other major currencies on Friday after latest reports showed euro zone inflation tumbled to a 10-year low and unemployment rate rose further, Xinhua reported.

The euro area seasonally adjusted unemployment rate was 8.2 percent in January 2009, compared with 8.1 percent in December 2008, according to Eurostat, the Statistical Office of the European Communities. Unemployment in January is a record high in two years.
In a separate report, the Eurostat said that euro area annual inflation fell to 1.1 percent in January 2009, its lowest level since July 1999. It was down sharply from the reading of 1.6 percent in December.

The fall brought inflation in the euro zone to well below the European Central Bank's comfort zone of "close to but below" 2 percent. The report boosted speculation that the European Central Bank would cut its key interest rate when it meets next week.

The U.S. Commerce Department reported that U.S. real gross domestic product decreased at an annual rate of 6.2 percent in the fourth quarter of 2008. It was much worse than an earlier estimate of 3.8 percent. The report helped erase some of the dollar's gains against European currencies.
The euro bought 1.2697 dollars in late New York trading compared with 1.2749 dollars it bought late Thursday. The pound fell to 1.4109 dollars from 1.4310 dollars.

The dollar rose to 1.2646 Canadian dollars from 1.2390 Canadian dollars, and rose to 1.1685 Swiss francs from 1.1650 Swiss francs. It fell to 97.84 Japanese yen from 98.38 Japanese yen.