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FX round-up: Dollar continues to rise

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Date: Thursday 04 Sep 2008

LONDON (ShareCast) - The dollar rose against the euro and sterling as oil prices continued to fall.

The dollar rose after better than expected factory orders data although it came off earlier highs following the release of the Federal Reserve's Beige Book on economic conditions.

Its assessment of the US economy took the shine of recent optimism. It showed the rate of economic activity remained slow and companies are reducing the number of new hires.

Overall the dollar has gained ground recently on optimism that the US economy is doing better than expected while gloomy data in Europe has put pressure on currencies there.

Sterling is currently at a 2-year low against the dollar as weak UK economic data increases expectations that the Bank of England will need to cut interest rates in the short term to boost growth.

There was at least some upbeat data from the UK Wednesday after a report showed an unexpected improvement in services sector activity.

Both the European Central Bank and the BoE are expected to keep their rates on hold at their upcoming meeting on Thursday.

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