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FX round-up: Dollar falls against euro

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Date: Monday 12 May 2008

LONDON (ShareCast) - The dollar fell versus the euro and the yen on Friday amid concern about the underlying health of the US economy while ECB officials signalled that interest rates would remain higher than in the US.

ECB President Jean-Claude Trichet said inflation remains his main concern with surging energy and food costs. He warned this could lead to a "protracted period" of higher prices.

On Friday investors also digested grim reading in the shape of American International Group’s massive losses. It results prompted renewed fears about the ongoing ripples of the credit market crunch.

The dollar fell despite upbeat economic data out Friday that showed the US trade deficit narrowed in March following a sharp drop in the number of imports.

Meanwhile sterling fell against the dollar after Thursday’s decision to keep interest rates unchanged at 5%.

Investors focused on the increased possibility of a rate cut next month following weak UK economic data.

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