Dollar records strongest week against euro

The dollar rose yesterday to record its strongest week against the euro since the creation of the shared currency six years ago.

The US currency was buoyed by an assurance from US treasury secretary Mr John Snow that the US would tackle its spiralling fiscal deficit. Mr Snow reiterated in television interviews yesterday that the US administration believed a strong dollar, whose value is set in flexible markets, was in the US national interest.

He said the administration was committed to working with Congress to reduce the deficit. The deficits have been a source of concern for investors even though the cyclical economic picture has been improving.

While Mr Snow said nothing new yesterday, traders said the market was in more of a mood to listen than it had been previously. "When he made the same comments when the dollar was falling, everyone ignored them," said Mr David Bloom, currency analyst at HSBC. "Now his comments tie in with what is happening in the market and have captured the market sentiment."

The dollar rose 1.1 per cent to $1.303 against the euro, constituting a 4.2 per cent rise over the week to a six-week high. It has risen 2.8 per cent this week against sterling, 2.3 per cent against the yen and 4.4 per cent against the Swiss franc.

Yesterday's currency moves came as data showed the US economy continued steadily to create jobs. The labour department said employers added 157,000 jobs last month, consistent with growth in the economy at or above its long-term trend.

Although the number was a little below economists' expectations, the figures for October and November were revised upwards by a combined 34,000. There was no change in the unemployment rate, which remained at 5.4 per cent - down from 6.3 per cent at its peak in June 2003.

Economists said the jobs figure suggested the labour market continued to improve but at an unimpressive rate. - (Financial Times Service)