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Euro Rallies To 15-Month Best Versus Dollar

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The euro surged to its best level in more than a year against the dollar as the US currency weakened broadly against other majors.

In the Eurozone, German consumer confidence for December unexpectedly dropped for a second month as economic and income expectations dropped moderately on an expected rise in unemployment.

European Central Bank President Jean-Claude Trichet said the ECB has avoided the materialization of deflationary risks thanks to its solid anchoring of inflation expectations.

The euro leveled off at a 15-month high versus the U.S. dollar, rising as high as 1.5094. The European currency rose above a Resistance level with the rally.

The euro remained in a range versus the British pound near a two-week high. The pair moved near 0.9050 in the early afternoon.

The UK economy contracted 0.3% sequentially in the third quarter, revised from a 0.4% fall estimated initially, a report from the Office for National Statistics showed Wednesday. This followed a decline of 0.6% between the first and second quarters of 2009. The statistical office also revised the annual decline for the third quarter to 5.1% from 5.2%.

The euro was slightly lower amid choppy trading against the yen after earlier extending a 3 1/2-week low to 131.50. The European currency bounced back above 132.00 in mid-day trading.

On the economic front in Euro land, the forward-looking German consumer confidence index for December dipped to 3.7 from 4 in November, a monthly survey conducted by the Nuremberg-based GfK Group showed Wednesday. Economists were expecting the index to remain at 4 for December.

Germany's Federal Statistical Office announced that the total value of orders received by building construction and civil and underground engineering enterprises decreased 5.7% year-on-year in September.

Across the Atlantic, the U.S. Labor Department revealed that initial jobless claims dropped 35,000 last week to a level of 466,000. This was the first reading below 500,000 this early January.

The Commerce Department report showed that personal income increased by 0.2% in October following a revised 0.2% increase in September. Economists had been expecting income to edge up by 0.1% compared to the lack of growth originally reported for the previous month.

The University of Michigan/Reuters consumer sentiment index rose to 67.4 in November. A reading of 67.0 was expected, compared to 66.0 in October.

(Market News Provided by RTTNews)

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