January 12, 2003	Sunday	Ziqa'ad 8, 1423

NEW YORK, Jan 11: A bleak December US employment report sent the dollar to its lowest level in three years against the euro on Friday, as the weak data converged with investors’ unease over the international outlook.

The Labour Department reported that the nonfarm sector shed 101,000 jobs. Economists had expected a modest gain, and the unforeseen fall illustrates continued weakness in the economy. Despite the steep fall in payrolls, the unemployment rate remained at 6.0 per cent

With the dollar already under selling pressure because of North Korea’s decision to formally abandon the nuclear Non-Proliferation treaty and continued fears of a war with Iraq, the data weakened the US currency across the board.

“The payrolls numbers were worse than expectations and that, along with what looks like a flip-flop in the conflict over North Korea, is contributing to a concerted effort to see the dollar lower,” said John McCarthy, director of foreign exchange at ING Barings Capital Markets in New York.

In late US trading, the euro changed hands at $1.0575 against the dollar, its strongest since November 1999 and up 0.87 per cent from its prior US close. The single currency also surged to a 3-1/2-year high against the yen above 126 yen.

Because of North Korea’s proximity to Japan, the world’s second-largest economy is seen at significant risk to any threats of aggression from the Communist regime. As a result, the yen remained equally as pressured as the dollar. Versus the yen, the dollar fell modestly, trading at 119.15 yen.

The dollar also tumbled to a 4-year low against the Swiss franc, falling as far as $1.3785 and down more than 0.83 percent from its previous US close.

Investors were on edge after North Korea’s decision to withdraw from the treaty despite its statement that it has no intention of building nuclear weapons.

This added to tensions created by the continuing weapons inspections in Iraq.

In other trading, The Australian dollar catapulted to a 2-1/2 year high of 58.31 cents, a gain of more than 1 percent against the US dollar, after the jobs report.—Reuters