Dollar Trades Flat vs Euro

The dollar was largely unchanged against the euro on Thursday, erasing overnight losses after a report showed enough U.S. private sector job growth to ease fears about Friday's payrolls data., Reuters 1/3/2008 7:56:29 AM

However, analysts said the outlook for the dollar was still grim, especially after Wednesday, when it posted its biggest daily decline since May 2006.

The yen overnight rose to a five-week high against the euro and dollar as investors sought relative safety for fear that a slowing U.S. economy may also put the brakes on global growth.

"With any fall in euro and yen, we would be buying those against the U.S. dollar because the outlook as far as we're concerned is going to continue to deteriorate," said David Mozina, head of foreign exchange strategy with Lehman Brothers in New York.

The dollar traded down 0.1 percent against the yen compared with late Wednesday, at 109.40 yen. Overnight it hit a low of 108.26 yen.

The euro traded largely unchanged against the dollar, at $1.4725. Against the yen, the euro was down 0.15 percent at 161.11 yen.

The New York Board of Trade's U.S. dollar index was trading flat on the day at 75.965 but overnight touched a 1-month low of 75.708.

A run of weak U.S. data, including news on Wednesday of contraction in the manufacturing sector in December, has prompted dealers to fully price in a 25 basis point cut in the Federal Reserve's benchmark interest rate at the end of the month, and a roughly one-in-five chance of a bigger 50 basis point move.

Dollar Trades Flat vs Euro