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December 14, 2006    

US Dollar strengthens on new jobless data

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by Elaine Frei

The US dollar was stronger on Thursday as unemployment data was much better than expected. Initial figures showed that even though 304,000 people filed new jobless claims, new claims dropped by 20,000 last week. It was the second straight week of big declines, with the previous week seeing a drop of 34,000 in new claims. The drop last week was only expected to be in the range of 4,000 lower than the previous week. Some analysts said that while unemployment data usually has little influence on the markets, the dollar is looking for support wherever it can find it just now.

The Japanese yen was 0.1 percent lower versus the greenback to ¥117.68, while sterling dropped 0.3 percent to $1.9620 and the euro fell 0.4 percent to $1.3167 against the US currency.

The yen was still having problems ahead of the Tankan survey of business confidence in Japan, and the yen hit a new all time low versus the euro before rebounding slightly. The shared currency was at ¥155.60 versus the Japanese currency at one point in the session before sliding slightly to ¥155.09, for very little net change on the day.

Elsewhere in Asia, the Chinese Renminbi traded at Rmb7.818 versus the US dollar, a gain of 3.67 percent since its revaluation in July 2005. The new gains came as the US Treasury Secretary remarked that China needs to work harder toward a free-floating exchange rate.

Sterling was 0.2 percent higher against the euro, to £0.6706 as expectations rose that the Bank of England will hike interest rates once again, probably in February. The Confederation of British Industry released a strong report on British industrial activity.

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