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FX round-up: Wall Street strength perks up dollar

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Date: Sunday 20 Jul 2008

LONDON (ShareCast) - A good day on Wall Street and the continued slide in the oil price boosted demand for the US dollar Friday.

Though tech stocks such as Google and Microsoft disappointed the market, better than expected figures from Citigroup provided much needed confidence in the US banking system. With Wells Fargo and JP Morgan also announcing results that were not as bad as feared this week there are some pundits who are maintaining that the worst of the banking crisis in the US is over, although other parts of the world may still have to endure their share of pain.

The greenback made headway against the euro and sterling in New York, with the former only buying $1.5849 at the close on Friday while sterling owners could no longer buy a dollar for 50p, as the UK currency slipped below $2.

Sterling had been on the back foot following a report in the Financial Times which suggested that that Treasury is examining ways of bending the “golden rules” put in place by current Prime Minister Gordon Brown when he was Chancellor of the Exchequer.

Relaxation of fiscal rules would allow the government to increase short-term borrowing. The UK Treasury said the report was “pure speculation” based on comments made some time ago.

At Friday’s close in London, sterling fell to $1.9956 while the euro advanced to be worth 79.39p.

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