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Dollar Soars Versus Slumping Euro

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The dollar soared to fresh multi-month highs versus the euro and sterling on Thursday as traders reacted to discouraging US jobs data and key interest rate decisions from across the Atlantic.

However, it was likely that deepening concerns about the debt problems facing a number of European nations prompted further strengthening of the dollar against the euro.

With Greece and Spain among the euro area member nations grappling with runaway deficits, the euro has been battered over the past month.

With the dollar on the rise, stocks tumbled around the world, exacerbating risk aversion and interest in the world's reserve currency.

The dollar rose to an 8-month peak of 1.3755 versus the euro, extending its dramatic move away from November's long-term low near 1.5100.

At the same time, the dollar rose to a 3-month high of 1.5762 versus the sterling.

The Bank of England halted its GBP 200 billion bond purchase programme and retained its key interest rate Thursday as policy makers assured these measures would continue to impart a substantial monetary stimulus to the sluggish UK economy for some time to come.

Meanwhile, the recovery process in the Eurozone economy is likely to be uneven, European Central Bank President Jean-Claude Trichet said Thursday, after the central bank retained key interest rate at a record low of 1%.

In his introductory statement, Trichet said this outlook remains subject to uncertainty. The outcome of the monetary analysis confirms the assessment of low inflationary pressure over the medium term, he added.

The buck touched C$1.0725 versus the loonie, hitting its highest level since mid-December. The resource-back loonie came under pressure as commodity prices plunged.

On the flip side, the dollar hit the skids versus the yen as the Japanese currency became the favored safe haven play due to fears about Friday's US jobs report. The buck dropped to Y89, its lowest level since December.

(Market News Provided by RTTNews)

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