LONDON, Oct 19: The dollar soared against the euro and the yen here on Wednesday but profit-taking and a stronger than expected report on industrial performance in the eurozone wiped out much of the gain.

The single European currency at one point fell below the 1.19-dollar level for the first time since early July, dropping to $1.1876, before rebounding strongly.

Against the yen the dollar jumped to 115.99, its highest level since September 2003.

The euro in later trade was at $1.1987, against $1.1957 late Tuesday in New York and 115.50 yen after 115.67 on Tuesday.

“We were seeing a corrective rebound from the lows that coincided with the industrial production data from the eurozone,” said Ian Stannard, currency strategist from BNP Paribas.

“The industrial production numbers fuelled the rebound and allowed the euro to gain momentum on the upside,” he added.

Eurozone industrial output surged ahead in August on the back of strong growth from the bloc’s smaller states, official EU figures published on Wednesday showed.

The output of eurozone factories jumped 0.8 per cent over one month in August — the biggest increase since April — and 2.6 per cent over 12 months.

The data far exceeded expert expectations for flat growth in industrial output over one month and growth of only 1.1 per cent over 12 months.

The dollar had earlier in the day been underpinned by the prospect of higher US interest rates following further hawkish comments from officials at the Federal Reserve.

In a speech Tuesday Federal Reserve vice chairman Roger Ferguson suggested that energy costs would add some 0.5 percentage points to the core inflation rate in the United States next year and noted that the Fed could respond by raising borrowing costs.

Despite the apparent economic slowdown taking place in the United States, the market continues to price in further interest rate hikes from the Federal Reserve, given its preoccupation with inflation.—AFP