LONDON, Aug 4: The euro climbed to its highest level against the dollar in two months on Thursday, breaking through 1.24 dollars for the first time since the end of May, as traders awaited key jobs data in the United States on Friday. News that the European Central Bank had held interest rates steady at 2.0 per cent and that the Bank of England had cut rates by 25 basis points to 4.50 per cent had almost no impact on the market.

The euro rose to 1.2379 dollars in late trade from 1.2340 late on Wednesday in New York. The dollar fell to 111.24 yen from 111.05 on Wednesday.

The euro had reached 1.2402 dollars, the highest point against the dollar in more than two months, at around 15:25 GMT, before falling back slightly. Analysts said the gains were explained partly by continuing buying from central banks in Asia or the Middle East, who are believed to be buying euros to diversify their foreign exchange reserves.

Furthermore, the failure of the US currency to break through the technically important 1.20-dollar level against the euro last week has led to buying of euros from investors to cover their positions.

Mike Berg, an economist at consultancy 4CAST, said speculators had been active in the market, using the thin volume to prompt these automatic orders. He said the market seemed to be ignoring “economic fundamentals” at the moment and that the dollar seemed to suffer “whether the economic data is good or bad”.

The dollar has fallen against the euro in recent weeks despite a raft of positive economic data pointing to continuing growth in the US economy. The latest indication is set to be the monthly US payroll figures on Friday. Economists expect the US economy to have created at least 180,000 jobs in July.

But some analysts doubt that even strong figures will be enough to reverse the current trend. The interest rate decisions by the European Central Bank and Bank of England had relatively little effect on trading because investors had anticipated the announcements, analysts said.

The euro was changing hands at 1.2379 dollars against 1.2340 late on Wednesday in New York, 137.64 yen (137.05), 0.6956 pounds (0.6941) and 1.5583 Swiss francs (1.5556). The dollar stood at 111.24 yen (111.05) and 1.2691 Swiss francs (1.2603).

The pound was being traded at 1.7789 dollars (1.7777), 197.85 yen (197.46) and 2.2400 Swiss francs (2.2408).—AFP