LONDON, July 8: The dollar rode higher against the euro and yen on Tuesday on rising optimism about the outlook for the US economy, which eclipsed news of an unexpected fall in German unemployment.

The single European currency fell to below the 1.13-dollar threshold for the first time since early May, buying 1.1288 dollars against 1.1316 dollars late on Monday.

The dollar stood at 118.59 yen from 118.13 late on Monday.

Confidence in prospects for the dollar has risen in recent days, with investors more expectant of a rebound in the US economy thanks to cuts in interest rates and levels of taxation.

There does seem to be a change in market sentiment, with many investors looking to reduce their exposure to the euro, said Jane Foley, economist at investment bank Barclays Capital

Sentiment has changed with respect to the US economy. If we go back to just after the end of the war, the bond market seemed to be very concerned about deflationary risks in the US economy.

And yet if you look at the economic data that we have seen since the end of the war, the vast majority of the US data has shown conditions stabilising to moderately improving, she added.

With the dollar on a roll, the market shrugged at data showing a surprise fall in the German unemployment total of 33,000 in June from May on a seasonally adjusted basis, confounding consensus analyst forecasts of a rise of 10,000.

The euro was changing hands at $1.1288 from 1.1316 late on Monday in New York, 133.84 yen (133.69), 0.6878 pounds (0.6859) and 1.5525 Swiss francs (1.5531).

The dollar was being quoted at 118.59 yen (118.13) and 1.3757 Swiss francs (1.3723).

The pound was at 1.6412 dollars (1.6492), 194.60 yen (194.90) and 2.2572 Swiss francs (2.2632).

On the London Bullion Market, the price of an ounce of gold stood at $346.25 from 348.15 on Monday afternoon. —AFP