LONDON, Jan 22: The dollar edged higher on Wednesday as the market awaited fresh developments on Iraq, a day after the ratcheting up of pressure on Baghdad sent the US unit stumbling to its lowest level in more than three years against the euro.

The single European currency slipped to $1.0695 against 1.0727 late on Tuesday in New York.

The dollar also rose to 118.34 yen from 118.08.

Meanwhile, on the London Bullion Market the spot gold price jumped to $359.25 per ounce from $353.8 late on Tuesday, after earlier hitting a high of 360.55 — a level not seen in almost six years.

Tensions in terms of the Gulf reached a new height last night which hit the dollar but since then it’s recovered a little bit of ground, said HSBC currency economist Mark Austin.

US President George W. Bush on Tuesday rebuffed calls by France, Russia and China for more time in order for UN disarmament inspectors in Iraq to fulfill their mandate, as Germany unequivocally refused to approve the use of force in Iraq in any future vote on the UN Security Council.

Austin put the dollar’s modest recovery down to the speed and extent of its move over the past few weeks, which he said had been substantial and pretty much unreversed.

He added that more strident comments from the Japanese about the possibility of intervention had offered the US unit a further boost.

Commerzbank analyst Kamal Sharma said with the dollar having on Tuesday fallen for the ninth consecutive day against the euro, for the first time since the single currency’s launch in January 1999, it was little surprise to see the euro-zone unit beginning to run out of steam.

But he said the sheer weight of buyers who had missed the euro/dollar rally and were now looking to buy on dips meant that any reversal in the euro’s fortunes would be “limited”.

Analysts said the dollar was particularly vulnerable to the apparent increased prospect of the United States and Britain attacking Iraq on their own.

Any speculation of an isolated US-UK move would hit the dollar even more, said CIBC World Markets analyst Audrey Childe-Freeman.

But analysts said while the remarks, which provided fresh evidence of an increasingly pragmatic approach within the ECB, were to be welcomed, they had provided the euro with only a modest boost.

At the end of the day, news from the European side is being widely ignored by the market, it’s all driven on the dollar side, HSBC’s Austin said.

The euro was changing hands at $1.0695 from 1.0727 late on Tuesday in New York, 126.50 yen (126.65), 0.6643 pounds (0.6628) and 1.4626 Swiss francs (1.4609).

The dollar was being quoted at 118.34 yen (118.08) and 1.3670 Swiss francs (1.3635).

The pound was at $1.6101 (1.6159), 190.63 yen (190.94) and 2.2022 Swiss francs (2.2026).

On the London Bullion Market, the price of an ounce of gold leapt to $359.25 from 353.80 late on Tuesday. —AFP