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Dollar Resumes Slide -
Euro Hits New Highs

By Jamie McGeever
12-27-4
 
NEW YORK (Reuters) - The dollar weakened across the board in thin and technically driven trading on Monday, with the euro hitting a new high as confidence grew that euro zone policy-makers will not intervene just yet to halt the currency's surge.
 
Extremely low liquidity owing to seasonal holidays in most of the northern Hemisphere, including London, the hub of global foreign exchange trading, made it easier for the few traders at their desks to move the market.
 
Small purchases triggered pre-placed stop-loss buy orders, which lifted the euro as high as $1.3639. Amid a lack of fundamental news such as U.S. economic data, traders were trying to take out options barriers around the $1.3600 level, dealers said.
 
The euro also rose to its highest in 18 months against the yen as traders assessed the economic impact from the deadly tsunami that devastated parts of Asia on Sunday.
 
"Nothing has changed: it's still sell dollars on rallies," said a trader at a large U.S. bank in New York. "Small orders are driving this."
 
Larry Brickman, currency strategist at Bank of America in New York, said there was no fresh fundamental economic reason for the move and agreed that the thin conditions helped magnify the market's deeper trend.
 
"It's more of the same, more dollar weakness and a continuation of the same theme going into the new year," Brickman said. "We don't think the ECB is going to come in," he said, referring to potential intervention from the European Central Bank to stem the euro's rise.
 
In a newspaper interview on Friday, Dutch Finance Minister Gerrit Zalm said the euro's rise was still within acceptable margins, suggesting little official alarm at the pace of the rise.
 
At around 11:30 a.m. EST (1630 GMT), the euro was up 0.8 percent at $1.3635 (EUR=: Quote, Profile, Research) and stronger at 140.48 yen (EURJPY=: Quote, Profile, Research) , having risen to highs of 140.80 yen earlier in New York.
 
The dollar slipped 0.6 percent to 103.08 yen (JPY=: Quote, Profile, Research) and was 0.8 percent down at 1.1337 Swiss francs (CHF=: Quote, Profile, Research) .
 
Sterling added 0.6 percent to $1.9356 (GBP=: Quote, Profile, Research) and the Australian dollar was more than 1 percent stronger at $0.7774 (AUD=: Quote, Profile, Research) .
 

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