Dollar again moves ahead on the euro

The dollar has strengthened again against the euro on the back of a strong rally in stocks and shares on US equity markets.

Evidence that the US economy may be slowing down of its own volition led to the rally in many US and European markets and pushed the dollar higher against the single currency.

The euro closed at $0.9615 from $0.9649. Sterling also gained slightly closing at 60.80p from 61.05p. In consequence the pound closed at 77.20p from 77.51p.

According to Mr Jim Power, chief economist at Bank of Ireland, the markets took weaker than expected jobs numbers in the US as evidence that the economy could be slowing down and hence the Federal Reserve would be under less pressure to raise interest rates. However, he warned that data for one month did not mean the start of a new trend.

But, he added, sentiment towards the euro remained weak and a return to the lows of $0.94 was possible over the coming weeks.

The focus remains on the differing growth prospects between the US and European economies. Traders said the sentiment to the euro remained bearish and it was unlikely to make much headway in the short-term after the European Central Bank kept rates steady on Thursday.

The US government reported yesterday that February non-farm payrolls grew by 43,000, following a 384,000-increase in the prior month. The figure fell well below economists' consensus forecasts for a solid 206,000 increase in jobs for February.

closely watched by the market for signs of wage inflation met expectations with a 0.3 per cent rise.

The report showed a slight rise in unemployment to 4.1 per cent in February from 4.0 per cent in January.

US stocks rallied sharply and European stockmarkets also gained from the jobs data. London's FTSE 100 index, the Paris CAC-40 and the pan-European Eurotop index of 300 shares showed gains of 0.24 per cent to 0.9 per cent, while the US Nasdaq rose 159.79 to close at 4,914.30 with the Dow Jones reaching 10,367.20, up 202.28. The US employment data was closely watched because more job creations would have indicated excess wage pressures and raised the possibility of the Federal Reserve boosting interest rates by as much as 50 basis points when its policy-making committee meets on March 21st.