Dollar drops versus euro, yen

The dollar fell against the euro and yen on Thursday as a steady flow of poor US economic data depressed sentiment, traders said.

In late morning London trade, the euro rose to 1.2939 dollars from 1.2876 late in New York on Wednesday.

Against the Japanese currency, the dollar dropped to 95.35 yen from 95.53 yen on Wednesday.

"The greenback, for long the beneficiary of safe haven flows, has over the past couple of days been forced on the defensive as poor economic news weighed on the market," said Calyon analyst Stuart Bennett.

Dealers were cautious despite continued efforts to tackle the global economic slowdown, including China's biggest interest rate cut in a decade.

"It didn't take long for bad news on growth to overwhelm better sentiment from aggressive policy responses aimed at turning economies around," said NAB Capital strategist John Kyriakopoulos.

A series of dismal US economic reports, including a 1.0 percent drop in consumer spending last month -- the steepest fall since September 2001 -- depressed the market in the United States ahead of Thursday's Thanksgiving holiday.

Orders for big-ticket durable goods fell a whopping 6.2 percent in October, a further bad sign for manufacturing, while weekly jobless claims rose 14,000 to a fresh 16-year high.

China slashed interest rates Wednesday by 108 basis points, the sharpest cut since the 1997 Asian financial crisis, to boost the faltering economy, a little over two weeks after the government unveiled a 586 billion-dollar stimulus package.

"Bold policy moves by China leave us more confident that Chinese growth might rebound in the second half of 2009," said Kyriakopoulos.

The euro won a boost from news that the European Commission was to implement a 200-billion-euro (259 billion dollars) stimulus plan aimed at reviving the recession-hit eurozone economies.

European Central Bank president Jean-Claude Trichet said eurozone policymakers were "ready to cut interest rates" again to boost growth.

In London trade on Thursday, the euro changed hands at 1.2939 dollars against 1.2876 dollars late on Wednesday, at 123.36 yen (122.03), 0.8367 pounds (0.8402) and 1.5493 Swiss francs (1.5512).

The dollar stood at 95.35 yen (95.53) and 1.1975 Swiss francs (1.2042).

The pound was at 1.5469 dollars (1.5319).

On the London Bullion Market, the price of gold rose to 814.99 dollars an ounce from 812.50 dollars late on Wednesday.

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