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FX round-up: Wall Street surge revives dollar

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Date: Friday 18 Jul 2008

LONDON (ShareCast) - A strong performance by Wall Street, blissful in its ignorance of the huge losses to be announced by Merrill Lynch after the market closed, bolstered the dollar on Thursday, although the greenback closed off its highest levels.

Better than expected US housing starts data lifted the US currency early on in New York, helping it recover from a bout of selling in Europe that was triggered by concerns that Asian and Middle Eastern investors are losing their appetite for dollar-denominated assets.

The dollar did best against the yen, climbing above 107 at one point. It lost ground against sterling and the euro, with the former hitting $2 while the latter rose from $1.5823 to around $1.5840.

In London, sterling was buoyed by a recovery in the share prices of banks, a crucial part of the UK’s service-based economy. Despite firming against the dollar, the pound lost ground to the euro, which closed in London at around 79.22p.

Concerns over the UK economy continue to act as a drag on sterling, with disappointing unemployment data hitting sentiment on Thursday. Unemployment claims rose at their fastest pace since December 1992 in June as the jobless figure jumped to 1.62m in the three months to May.

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