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FX round-up: Dollar resumes tailspin

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Date: Thursday 13 Mar 2008

LONDON (ShareCast) - The dollar continued to plumb new depths against the euro in New York trading as the European currency strengthened on the back of some robust production data.

Industrial production in the euro region climbed 0.9% in January after showing no change in December.

The euro broke through the $1.55 barrier in early trading in New York and continued rising, as many investors came to the conclusion that Tuesday’s announcement of an orchestrated cash injection into the banking system by several central banks still may not be enough to prevent the US from slipping into recession and dragging other economies down with it.

The greenback also struggled against the Japanese yen and sterling in New York trading. The dollar slid to 101.66 yen from 103 the day before while sterling advanced to $2.0271 from $2.0061 the day before.

Earlier in the day in London, the UK budget had minimal effect on proceedings with the lowering of the government’s 2008 growth target to a range of 1.75% to 2.25% widely anticipated. The revised target range for 2009 is for growth of 2.25% to 2.75%, which many observers felt was optimistic.

UK trade figures also did little to upset sterling’s equilibrium. Britain’s trade deficit with the rest of the world was unmoved at £4.1bn in January. The visible trade deficit also remained the same as December at £7.5bn, revised down from £7.6bn previously.

As well as beating up on the weak dollar, sterling edged higher against the euro.

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