The euro continued to gain against the dollar in low-volume trading in New York, passing the $0.93 level to trade at $0.9308 late Tuesday, December 26.
The dollar, still undermined by the downgrading of US economic growth projections, nevertheless rallied against the yen on weak Japanese data.
Most European financial markets remained closed Tuesday for the Christmas holiday, after all markets but Japan's were closed Monday.
After climbing to $0.9301 at the start of trade in Asian markets, the single European currency hovered around $0.929 here before firming once more towards the end of the day.
The euro has made a 13 percent gain since it bottomed out at $0.8230 on October 26.
It also made gains against the Japanese yen, trading late Tuesday at 105.75, up slightly from 104.41 yen in Japan Monday.
Some analysts believe that if the euro can find a firm footing above $0.95, it may return to parity with the US dollar, something that has not been seen for more than a year.
However analysts at Natexis Banques Populaires identify another threshold of resistance at $0.96.
The slowdown in US economic growth is expected by most analysts to continue to keep the dollar weak. US Citibank analysts said in a research note, however, that the dollar's weakness in face of the euro could be short-lived.
"The magnitude of the cyclical correction in the US economy and, therefore, the US dollar, is likely to be greater than anticipated just a month ago.
"(But) the dollar weakness is likely to be cyclical," the bank said.
"Expected Fed easing (of interest rates)... and the increasing potential for tax cuts in the United States as the new year unfolds should lead to a new surge in US growth during the first half of 2001," with lower taxes, strong trend productivity growth and rising equity values leading to a recovery of the US dollar, the bank said.
Against the Japanese yen, the dollar came close to its highest level since August 1999, trading at 113.61 yen late Tuesday, up from 112.89-92 Monday in Tokyo.
Data released early Tuesday showed Japan's jobless rate rose to 4.8 percent in November, just off the record post-war high of 4.9 percent reached in March. Japanese household spending slumped 2.3 percent in November from a year earlier.
"Investors sold the yen both against the dollar and the euro, as this morning's figures confirmed that a recovery in individual consumption in Japan is still far off," said Tokyo Trust and Banking dealer Kenichi Ishiwaki.
The yen's negative response to the data in the light holiday trade here "might be a slight overreaction, although it's not a wrong reaction," said HSBC Securities senior economist Peter Morgan.— (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)
