Euro sinks under $1.39

By AFP

July 15, 2010 Updated Jun 8, 2009 at 9:01 AM CDT

The euro sank against the dollar on Monday as traders digested an encouraging US jobs report, while the British pound was hit again by renewed political turmoil.

In late morning London trade, the European single currency fell as low as 1.3806 dollars. It later pulled back to 1.3828, down from 1.3970 in New York late on Friday.

Against the Japanese currency, the dollar fell to 98.32 yen from 98.62 yen on Friday.

The dollar had unexpectedly risen Friday after the US Labor Department said the jobless rate surged to 9.4 percent in May -- but the number of job losses slowed to 345,000 from 539,000 in April.

The data, seen as one of the best indicators of economic momentum, offered conflicting signals about a weak labour market where the pace of massive job cuts is easing, a positive sign for the recession-battered economy.

"The report showed that far fewer jobs were lost in May than even the most optimistic analysts had predicted," said Commerzbank analyst Antje Praefcke.

"Even despite the fact that the unemployment rate came in slightly above expectations, the report was clearly good news for the US economy."

The US currency's rally fuelled speculation of an earlier-than-expected interest rate hike but market players remained cautious over the outlook, dealers said.

In Britain, sterling fell against the dollar as ongoing political uncertainty plagued the currency.

Prime Minister Gordon Brown was clinging to power on Monday after European elections which saw his party suffer one of its worst defeats on record and historic gains for the far-right.

Brown's Labour Party was beaten into third place behind fringe anti-Europeans the United Kingdom Independence Party (UKIP), leaving him fighting for his job days after 10 of his ministers resigned.

The biggest winners in the European polls were the British National Party (BNP), whose policies include an end to all immigration to Britain, which won its first two members of the European Parliament.

Elsewhere, the yen remained pressured after official data showed Monday that Japan's current account surplus in April fell 54.5 percent from a year earlier as exports slumped further.

The surplus dropped to 630.5 billion yen (6.39 billion dollars) against a surplus of 1,385.9 billion yen a year earlier despite signs that global demand was picking up, the finance ministry said.

In London trading on Monday, the euro was changing hands at 1.3828 dollars against 1.3970 dollars late on Friday, at 136.41 yen (137.80), 0.8746 pounds (0.8741) and 1.5189 Swiss francs (1.5172).

The dollar stood at 98.32 yen (98.62) and 1.0949 Swiss francs (1.0860).

The pound was at 1.5862 dollars (1.5974).

On the London Bullion Market, the price of gold dropped to 948 dollars an ounce from 962 dollars an ounce late on Friday.

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