The dollar
showed increasing signs of resilience last week, hitting a one-month
high against the euro as evidence mounted that the effects of the
credit crisis were making themselves felt across the globe. Over the
week, the dollar rose 1% against the euro, climbed 0.8% against the
pound. The dollar lost ground against the yen. The currency increased for a third week against the euro, its longest stretch of gains since May 2007.
The dollar’s rally came in spite of
figures on Thursday that showed that US growth came in below forecast
in the second quarter and data on Friday that revealed that US
unemployment rose to its highest level in more than four years in July.
The U.S. economy shrank at the end of 2007 and grew less than forecast
in this year's second quarter, figures from the Commerce Department
showed July 31.
U.S. payrolls shrank in July
for a seventh straight month, decreasing by 51,000, matching the
previous month's decline, the Labor Department said yesterday in
Washington. The median forecast of 79 economists was for a reduction of
75,000. The unemployment rate rose to 5.7%, the highest since March
2004, from 5.5% .
Indeed, eurozone
purchasing managers’ surveys suggested that the region’s services and
manufacturing sectors contracted sharply in July. The 15-nation euro
fell yesterday versus the dollar as Germany's Federal Statistics Office
in Wiesbaden said retail sales, adjusted for inflation and seasonal
swings, dropped 1.4% in June after increasing 0.5% in the prior month.
The median forecast of economists was for a decrease of 0.5%.
The pound fell to
$1.9727, the lowest level since July 10, as an index of British
manufacturing dropped in July to the weakest since December 1998. The
Bank of England is forecast to hold its target rate at 5% on Aug. 7.