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Last Updated: Friday, 9 January, 2004, 14:38 GMT
Bad news scuppers dollar recovery
When the jobs data were announced at 1330 GMT, the euro soared against the dollar

The US dollar has slumped to a new low against the euro on poor US jobs data.

The plunge came hours after the dollar rallied against the yen on reports of a massive market intervention by the Bank of Japan.

The dollar fell from its day high of 108 yen back to 106, while one euro bought as much as $1.2840.

Japan has intervened massively in money markets in a bid to stop the yen rising against the dollar and jeopardizing the country's export-led recovery.

Traders suspected Japan had spent up to three trillion yen ($28.25bn) on Monday and Tuesday in a bid to shore up the greenback.

Naomi Fink , senior currency analyst at BNP Paribas said: "If that's the case, the intervention (on Friday) must have been massive... it's hard to tell if they put in 1 trillion, but I wouldn't be surprised if it was over 500bn."

But when the jobs data were released at 1330 GMT, all the hard-won gains evaporated.

Dollar doldrums

Meanwhile, the US dollar's slide to multi-year lows against various currencies has added incentive to buy oil, which is priced in dollars and so becomes cheaper for non-dollar investors.

As a result, US light crude prices hit a nine-month high during Asian trade, propelled by worries that a cold snap in America would draw down crude stocks that are already at their lowest since 1975.

The NYMEX February crude price rose as high as $34.40 a barrel, up 42 cents or 1.2 percent on the day, marking the highest price since March 18, 2003 - just before the Iraq war.

That jump came as the dollar - recently weighed down by concerns over a bulging US current account deficit - soared to its highest level against the yen since December 15.

Japanese recovery

The Ministry of Finance declined to comment on the apparent intervention, but a senior official did reiterate Tokyo's resolve to fight dollar bears in a bid to prevent a rising yen from hurting Japan's export-led economic recovery.

The yen has strengthened consistently against the US currency in much of the past year, by about 10%, because of demand from foreign investors to buy Japanese equities as the world's second-largest economy showed signs of life after years in the doldrums.


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