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Dollar stays near record euro low Dollar stays near record euro low
(about 7 hours later)
The US dollar remained near record lows against the euro in early Friday trading, on growing expectation of a further American interest rate cut. The US dollar hovered near record lows against the euro by close of trade in New York on Friday, as expectations over a US interest rate cut increased.
After disappointing US economic data overnight, one euro was worth $1.4304 by mid-afternoon in Europe, just short of Thursday's all-time $1.4311 low. One euro was worth $1.4265 by mid-afternoon in the US, after the greenback sunk just short of $1.4320.
Analysts said the rise in US unemployment makes the Federal Reserve more likely to trim rates this month. Analysts said a rise in US unemployment adds to chances of an interest rate cut when The Federal Reserve meets in October, in a bid to boost the economy.
Against Japan's yen, the dollar remained near a three-week low. Against Japan's yen, the dollar stayed near three-week lows, at 114.77 yen.
The greenback was at 115.38 yen, while against sterling, one pound was worth $2.0511.
Rejuvenate confidenceRejuvenate confidence
Commentators now expect the Fed to trim US interest rates from 4.75% to 4.5% when it next meets later this month. Commentators now say the Fed could well reduce rates from 4.75% to 4.5%.
The dollar has been sliding since the Federal Reserve cut rates from 5.25% to 4.75% in September to help rejuvenate confidence in the world's largest economy.The dollar has been sliding since the Federal Reserve cut rates from 5.25% to 4.75% in September to help rejuvenate confidence in the world's largest economy.
This followed a summer of turmoil in the world's credit markets, sparked by record loan defaults in the US sub-prime mortgage sector.This followed a summer of turmoil in the world's credit markets, sparked by record loan defaults in the US sub-prime mortgage sector.
Since then, a raft of mostly disappointing economic news and soft inflation figures has prompted the anticipation of further rate cuts.Since then, a raft of mostly disappointing economic news and soft inflation figures has prompted the anticipation of further rate cuts.
While lowering borrowing costs can jump start the economy, it can also have an adverse impact as investors seek to place money in economies where the returns are higher.