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Dollar at record low against euro
November 5, 2004
The dollar fell to a record low against the euro on Friday, with analysts forecasting more declines to come.

Oil prices, meanwhile, were still under pressure, falling from recent highs to their lowest levels in five weeks.

Stock markets, however, continued to surge in the US, Asia and Europe following the re-election of President George W Bush.

Investors said they expected Mr Bush to keep the dollar weak in order to stoke export demand and economic growth.

Some also were worried that the size of the US budget deficit could drive down the dollar even further.

Brushed off

The drop in the dollar came despite positive jobs data from the US Labor Office on Friday.

"What this shows is that the structural problems in the US economy are completely dominating the positive cyclical news that we had today from payrolls [unemployment figures]," said Aziz McMahon, a strategist at ABN Amro in London.

"It seems now that the longer-term investors like pension funds and perhaps monetary authorities are either hedging their dollar risk or moving assets out of the United States.

"It looks like the dollar has further to fall," Mr McMahon said.

The US currency dropped as low as $1.2940 against the euro.

"The price action today is nothing short of stunning," said Richard Franulovich of Westpac Banking. "This is a pretty good guide at just how entrenched negative sentiment is toward the dollar."

Oil slide

The US benchmark for oil prices - light crude - dropped as low as $48.43 a barrel, 13% off its October record, before bouncing back to $48.70. London's top oil price, Brent crude, was little changed at $46.05 in afternoon trading.

Increased production from Opec members has helped rebuild US crude stockpiles, hit after Hurricane Ivan in September.

Analysts said the rising stocks were easing prices, but others warned ongoing violence in Iraq could reverse falls.


Source: BBCNEWS


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