"The sell-off gathered pace after a German newspaper cited a high-ranking U.S. Treasury official as saying the United States would intervene to support the dollar only after the euro reached $1.45."
FOREX-Dollar dives to new record lows
NEW YORK, Dec 3 (Reuters) - The dollar slid to a new record low against the euro on Friday amid disappointing U.S. jobs data and a perception that the United States was in no hurry to stem the dollar's fall.
The dollar crumbled to $1.3458 per euro , according to Reuters data, a decline of nearly 1.4 percent and a new record low. It also fell more than 1 percent against other currencies.
It was the dollar's biggest fall against the euro since early August and the eighth time in the last nine sessions that the dollar has made a new low against the euro.
The initial impetus for the dollar's decline was a U.S. jobs report which showed payrolls rising at a slower rate than economists had forecast in November.
The sell-off gathered pace after a German newspaper cited a high-ranking U.S. Treasury official as saying the United States would intervene to support the dollar only after the euro reached $1.45.
Dealers and analysts said they viewed the German report with some skepticism, noting that the Treasury was more likely to be concerned about market volatility than about a particular currency price level.
Still, they said the report helped underscore the market's belief that the U.S. had no plan to stop the dollar's slide, despite its official strong dollar policy.
"I don't think the market was perceiving any near-term risk of intervention either in terms of actual timing or levels, but when they see a story like this it reinforces what has already been in the market's mind about the administration's view," said Bob Lynch, senior currency strategist at BNP Paribas.
By early afternoon in New York, the euro was trading at $1.3452, up 1.37 percent and just below the day's highs.
Against the yen the dollar was off more than 1 percent to 102.08 .
Against the Swiss franc the dollar was trading at 1.1305 francs , down 1.76 percent on the session and a new nine-year low. The dollar also fell to new 9-year lows against a basket of currencies <.DXY>.
Sterling was up 0.91 percent to $1.9420 .
U.S. Treasury Secretary John Snow, speaking on CNBC television, reiterated the administration's support for a strong dollar.
U.S. PAYROLLS DISAPPOINT
The dollar came under pressure early after the U.S. government reported that non-farm payrolls rose just 112,000 in November, below economists' median forecast for a 180,000 rise. The jobless rate was 5.4 percent, matching forecasts.
"Short-term players were positioned for something better than consensus, so the jobs number exacerbated the dollar's move down," said Shaun Osborne, chief currency strategist at Scotia Capital in Toronto.
The softer than expected report hurt the dollar because it cast some doubts on the pace of the U.S. economic recovery and also raised questions about the pace at which the Federal Reserve would continue to raise interest rates, analysts said.
The dollar fleetingly recouped a few losses after the Institute for Supply Management non-manufacturing report was reported at a stronger than expected 61.3 for November, above economists' expectations for a reading of 58.7.
The dollar has lost almost 10 percent of its value against the euro since September, mostly on concerns over the funding of the gaping U.S. current account gap.
With the market biased toward a weak dollar, the dollar has been vulnerable to weak U.S. economic data but has failed to profit from evidence of economic strength.
The dollar's big decline on Friday made it likely that the day's price action would render moot a dollar-bullish technical signal seen on Thursday, technical analysts said.
On Thursday, euro/dollar had a bearish key reversal day, where it closed lower than the previous day's lows after hitting new highs, suggesting a turnaround for the currency pair. But technical analysts said Friday's euro/dollar rally would show that Thursday's signal was false.
"If we get a decent close, (the euro) will probably continue to grind higher next week,' said Scotia's Osborne.
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12/03/2004 17:40
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