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Dollar hits 22-month peak vs. euro


07:12 AM May 25th, 2012

May 25th, 2012 07:12 AM


NEW YORK—The dollar extended its gains against the euro and other major currencies Thursday as investors sought safety as Europe’s leaders struggle to contain Greece’s debt crisis.

The euro was traded at $1.2532 around 2100 GMT, down from $1.2582 at the same time Wednesday.

The dollar also strengthened against the Japanese currency from a day ago, to 79.59 yen from 79.45 yen.

The embattled European currency earlier had plunged to $1.2516, its lowest level since July 2010, after a European Union summit late Wednesday produced no clear path forward in the debt crisis and markets were besieged by a slew of discouraging economic data for the eurozone and Britain.

“Nothing in the data… suggests that economic conditions in the UK and Europe are easing against a backdrop of policy paralysis across Europe,” CMC Markets analyst Michael Hewson told AFP.

“Unless policymakers come up with radical new solutions… they will soon be faced with the prospect of delivering closer fiscal integration or overseeing the breakup of the euro,” he said.

Kathy Lien, head of currency research at GFT, said the European Central Bank “unfortunately…

is just sitting on the sidelines waiting for the heads of states in the region to end their political gridlock.”

“Europe, the euro and the world for that matter desperately needs helps from the European Central Bank who has it within their power to stop the EUR/USD from falling,” she said. “The next stop could be a six-year low of $1.20.”

The latest US economic indicators were subdued, showing the tentative recovery remained on track despite high unemployment.

New claims for US unemployment benefits fell last week, signaling a slow stabilization in the pace of layoffs.

Big-ticket manufacturing rose in April, with durable goods orders up a modest 0.2 percent. Excluding the defense sector, they jumped 1.2 percent.

“There were no major upside surprises but the modest decline in jobless claims and the rebound in durable goods orders confirm that the US economy is recovering,” GFT’s Lien said.

Against the Swiss currency, the dollar rose to 0.9584 francs from 0.9543 late Wednesday.

The pound fell to $1.5668 from $1.5689.

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