Euro continues slide against dollar

The euro has continued to decline against the dollar as expectations of stronger growth in the US economy continue to grow.

The euro fell 2% against the dollar on Thursday to a fresh four-month low, and fell further on Friday.

In late New York trade, the euro was 0.3% lower at $1.0885.

The euro has fallen out of favour amid weak economic growth in the eurozone, and signs that a rebound may finally be under way in the US.

US takes the lead

On Thursday, figures from the US hinted at a recovery in manufacturing and an improving labour market.

"It's fairly clear that the US economic data has given the dollar a pretty good shove over the last couple of days," said Andrew Delano, currency analyst at IDEAglobal.

"We're also seeing some weak data out of the eurozone," he added.

"The US is ultimately going to lead the global cyclical story. The US is going to draw substantial capital flows going forward."

Europe's weakness

The euro has lost 9% of its value against the dollar since June, partially reversing a sustained 33% increase since early last year.

Of the world's three major currencies, it has suffered most from the exodus from government bond markets led by traders who preferred European debt prior to the Iraq war.

Dealers are now increasing worried about weakness in Europe, with four European countries - including the continent's economic powerhouse, Germany - now in recession.

France added to the gloom on Wednesday when it reported that its economy shrank by 0.3% between April and June.

There are hopes though that the fall in the single currency could eventually help to stimulate growth in Europe.

Figures from the German economy on Thursday showed that it was the collapse of exports, hurt by the high value of the euro, that pushed the country into recession last quarter.