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FOREX-U.S. dollar rises; euro hurt by EU comment

Published 10/01/2009, 09:17 AM
Updated 10/01/2009, 09:21 AM

* Euro falls on EU's Almunia comments about strong euro

* Trichet comments further support Almunia's

* U.S. jobless claims rise, personal spending rises (Recasts, updates prices, adds comment, U.S. data, changes byline, dateline; previous LONDON)

By Gertrude Chavez-Dreyfuss

NEW YORK, Oct 1 (Reuters) - The U.S. dollar rose against the euro on Thursday, boosted by comments from a top European Union official who said the region's finance ministers would discuss the single currency's recent appreciation before a Group of Seven meeting on Saturday.

Waning risk appetite amid a mixed batch of U.S. economic data has also prompted investors to seek the perceived safety of the greenback. On Thursday, data showed U.S. initial jobless claims rose in the latest week, a reminder that the labor sector was far from stable.

Traders, however, focused on remarks made by EU Economic and Monetary Affairs Commissioner Joaquin Almunia saying euro strength would be discussed when G7 officials meet in Istanbul at the weekend. [ID:nWEA3160].

"Comments from an EU officials about the euro's strength which would be discussed at the G7 meeting have had a nasty impact on the euro against the dollar," said David Watt, senior currency strategist, at RBC Capital Markets in Toronto. "So people are not selling the dollar at the moment."

Supporting Almunia's statements were comments from European Central Bank President Jean-Claude Trichet, who said excess foreign exchange moves had an adverse impact. On Monday, he backed the argument for a strong U.S. currency.

Their comments followed statements from finance officials around the world in the past week on their discomfort with their currencies' strength against the dollar, which has tumbled more than 6 percent against a currency basket in the third quarter.

In early New York trading, the euro fell 0.5 percent to $1.4557 .

Thursday's mixed data -- a weaker-than-expected jobless claims report and strong personal spending for September -- preserved the dollar's bid tone.

"Overall, though there's very little sign of a tangible improvement in the labor market and with the nonfarm payrolls looming tomorrow, I think the focus is going to be skewed more to a disappointing result -- that the rate of job losses may not decelerate any further at this stage," said Brian Dolan, chief currency strategist, at Forex.com in Bedminster, New Jersey.

The dollar was up slightly against the yen at 89.81, staying above an eight-month trough of 88.23 yen hit earlier this week on trading platform EBS. Offers from some Japanese exporters limited gains in the dollar, traders said.

The ICE futures dollar index <.DXY> rose 0.4 percent to 76.959.

(Additional reporting by Leah Schnurr; Editing by Chizu Nomiyama)

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