Euro soars to 7-month high vs dollar

Euro soars to 7-month high vs dollar after strong China data and tame US inflation

Associated Press

NEW YORK (AP) -- Stronger manufacturing data from China pushed the euro to a seven-month high against the dollar Friday. Traders also sold the dollar after a report showed that U.S. inflation has remained mild, leading traders to anticipate that the Federal Reserve will keep interest rates low.

HSBC Corp. said the preliminary version of its monthly purchasing managers' index in China rose to a 14-month high, a sign that the world's second-largest economy is recovering.

In the U.S., the Labor Department said its consumer price index fell 0.3 percent in November from October, meaning that inflation is still mild. Traders took the data to mean that the Fed will continue to keep interest rates low to boost the economy.

The euro rose to $1.3159 in late trading Friday from $1.3075 late Thursday. The euro rose as high as $1.3173 in afternoon trading Friday, its highest point against the dollar since May 4.

The yen recovered slightly after hitting a nearly nine-month low against the dollar early Friday, ahead of a weekend election that may result in a new prime minister for Japan.

The dollar fell to 83.46 Japanese yen from 83.58 yen late Thursday. The dollar rose as high as 83.95 yen earlier in the day, its highest point against the yen since March.

In other trading, the British pound rose to $1.6167 from $1.6110.

The dollar fell to 0.9179 Swiss franc from 0.9238 Swiss franc. It rose to 98.65 Canadian cents from 98.54 Canadian cents.

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