Euro retreats after short-lived surge

The euro fell back against the dollar and yen late yesterday in the US after an overnight upsurge to one-week highs failed to stick.

"People have been trying to find reasons to buy the euro, but generally these up moves are viewed as technical short-covering as opposed to any love affair beginning with the euro," said Mr Ben Strauss, vice-president at Bank Julius Baer. "Now we're seeing some profit taking ahead of the weekend."

The euro had soared toward $1.0250 in European trade, extending Thursday's brisk gains made on a strong German Ifo business climate index and record US trade deficit.

The euro got a fresh boost from further evidence of a strong euro zone economy. France's roaring economy is poised to take a breather in early 2000 but the growth rate could still top 3 per cent once any effects of the millennium switch are absorbed, the French national statistics institute said.

But choppy year-end trading overshadowed the more positive economic outlook for the single currency.

The euro tumbled toward $1.0120 in US trade, down around a third of a percentage point from Thursday's US close.

Traders said the euro, which fell to one-to-one dollar parity earlier this month, remained at risk of further declines.