FOREX-Dollar falls as euro-zone inflation spikes to record

Mon Jun 16, 2008 2:53pm BST
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* Dollar falls as euro-zone inflation touches record highs

* New York manufacturing gauge tumbles in May

* ECB July rate hike almost certain

By Lucia Mutikani

NEW YORK, June 16 (Reuters) - The dollar fell versus the euro on Monday, snapping a three-day winning streak, as a jump in euro-zone annual inflation to a record high sealed the case for a European Central Bank interest rate hike next month.

Data showing a steeper-than-expected contraction in manufacturing in New York state and more hawkish talk from an ECB Governing Council member also weighed on the dollar, which rallied last week on hopes the Federal Reserve would start tightening monetary policy later this year to curb inflation.

"A fair amount of it is the higher euro-zone inflation. It it pretty much puts a lock on it (ECB rate hike), unless we hear something different from (ECB President Jean-Claude) Trichet," said Brian Dolan, chief strategist at Forex.com in Bedminster, New Jersey.

"I will say it's a done deal at this point. It looks like some of the dollar euphoria has worn off a little bit, but overall we are still in the lower half of the euro/dollar range."  Continued...

 
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