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Last Updated: Friday, 24 November 2006, 14:50 GMT
Dollar loses ground against euro
Euro notes
Recent economic news has favoured the euro
The dollar has plunged to its lowest level against the euro since April 2005 amid concerns for the US economy.

The euro surged to $1.3086 against the dollar, with many other currencies following suit.

Sterling rose almost 1% to $1.93, the yen hit a two-month high and Russia's rouble rose to a seven-year high.

Analysts have voiced concerns about the US economy after the White House downgraded its growth forecasts amid a sharp slowdown in the housing market.

Meanwhile, expectations that the European Central Bank is once again about to raise interest rates gave a lift to the euro.

Recent figures showing an unexpected rise in German business sentiment - its seventh quarterly rise in a row - also helped. So did French data showing that business confidence held at five-year highs in November.

However, traders added that thin trade as a result of the US Thanksgiving holiday might have benefited the euro.

"For the time being, the news flow is favouring the euro. If we close above $1.30 today, the key will be if we reject all of this as a Thanksgiving phenomenon or not," said Ian Gunner, head of foreign exchange research at Mellon Bank.

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