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FOREX-Dollar on track for best week since 1992

Fri, Oct 3 2008, 16:21 GMT
http://www.afxnews.com

NEW YORK, Oct 3 (Reuters) - The dollar remained on track for its best weekly gain against a basket of currencies in 16 years on Friday, after a report showed the U.S. unemployment rate remained steady in September even while employers shed jobs.

U.S. employers cut payrolls at the steepest rate in 5-1/2 years last month, according to a Labor Department report, slashing an unexpectedly large 159,000 nonfarm jobs as employment contracted for a ninth straight month.

But foreign exchange investors focused on the unemployment rate, which was unchanged from August at 6.1 percent. For details see

"Trichet opened up for a rate cut, some would say that it's a bit late, but they (ECB) needed some time to change the mood of the board," Hydeskov said.

A squeeze in interbank lending, with banks reluctant to lend to each other given the climate of bank failures, is a major factor behind the dollar's gains, analysts say.

Against that backdrop, a slew of data this week showing the U.S. economy has likely fallen into a full-blown recession has done little to take the wind out of the dollar's rise, even as the Fed is seen likely to cut rates as well this month.

(Additional reporting by Gertrude Chavez-Dreyfuss in New York and Veronica Brown in London; Editing by Leslie Adler) Keywords: MARKETS FOREX

Varghese Joseph

vj

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