国际英语新闻：European debt concerns drive dollar higher during past week

NEW YORK, Feb. 5 (Xinhua) -- The dollar rose against most major currencies during the past week as concerns over European sovereign debt problems boosted safety haven demand for the greenback.

Investors worried that the debt crisis may spread from Greece to other countries, threatening major economies of the eurozone. This is the toughest test for the euro since the single currency was launched in 1999, analysts said.

The Greek public deficit is tipped to reach 12.7 percent of gross domestic product (GDP) in 2009, far above the EU's accepted ceiling of 3 percent. Some major rating agencies have already cut their ratings to Greek sovereign debt. Portugal and Spain are also struggling in rising public debts and may face similar difficulties.

The Eurpean Union approved Greece's plan to cut budget deficit to under 3 percent of GDP in three years on Wednesday. Some top EU officials, including European Central Bank president Jean-Claude Trichet, said they were confident that Greece could meet its goals for cutting deficits.

But the comments failed to stop the euro from falling as investors doubt whether the Greek government could implement the plan smoothly. Investors are also skeptical about the ability of Spanish and Portuguese governments to get deficit under control.

Greek customs and tax officials launched a 48-hour strike on Thursday against the government austerity measures of cutting spending and raising taxes. More labor unrest is expected after the country's largest union, the General Confederation of Greek Workers (GSEE), announced on Thursday a one-day strike on Feb. 24.

The euro touched its lowest level in eight months against the dollar on Friday. The dollar index which measures the performance of the U.S. dollar against a basket of currencies rose to 80.21, the highest since July 2009.

The dollar edged lower early this week as some encouraging economic data lifted investors' risk appetite. But the greenback rebounded later amid expectations for a faster recovery in the United States than in Europe.

The Institute of Supply Management (ISM) reported Monday that ISM composite index for U.S manufacturing industries jumped by 3.5 points in January to 58.4. There were broad-based gains across all the components of the survey.

The production index catapulted upward by 6.5 points to 66.2. The employment index distanced itself from the contraction/expansion threshold of 50, rising by 3.1 points to 53.3. Indexes for new orders and new export orders also moved up.

The strong gains in the ISM manufacturing index are consistent with other leading indicators, analysts said. The growth is a confluence of generally improving economic activity in both the United States and a number of key export markets, as well as some unusual seasonal factors where severe weather in December may have hampered shipping and production activity.

The ISM services industries composite index moved up to 50.5 from 49.8 in December, according to a separate report released on Wednesday. Services industries have been hovering near the break even point of 50 for about five months in a row and are lagging considerably behind the manufacturing sector in terms of moving into an expansion mode, analysts said.

U.S. personal income increased 0.4 percent in December, the Commerce Department reported. Personal consumption expenditures increased 0.2 percent, and real consumer spending after inflation grew for the sixth time in seven months by 0.1 percent. Overall, consumer spending rose 2.0 percent in the fourth quarter.

Pending sales of existing homes, a forward-looking indicator based on contracts signed in December, increased 1 percent to 96.6 from 95.6 in November, and remains 10.9 percent above December 2008 when it was 87.1, the National Association of Realtors (NAR) reported Tuesday. The rebound in the latest report suggests existing home sales likely stabilized in January after dropping sharply at the end of 2009, said analysts of Nomura Economic Research.

U.S. non-farm payroll fell by 20,000 in January, but the unemployment rate fell unexpectedly to 9.7 percent from 10.0 percent, according to a closely-watched report released on Friday.

Manufacturing payrolls increased in January for the first time since January 2007. Temporary employment rose sharply for the fourth month in a row, usually a precursor to overall employment gains.

The economy has now lost 8.4 million jobs since the recession began in December 2007, the Labor Department said.

The trend in labor market is much improved and the economy is on the verge of creating jobs, said analysts of IHS Global Insight. But the improvement is likely to be gradual, suggesting that the welcome drop in the unemployment rate can't yet be taken as the start of a trend.

The euro bought 1.3634 dollars in late Friday New York trading, about 1.7 percent lower than a week ago. The British pound fell 2.4 percent to 1.5602 dollars. The dollar rose 0.4 percent during the past week to 1.0731 Canadian dollars, and rose 1.3 percent to 1.0746 Swiss francs. It fell 1.2 percent to 89.24 Japanese yen.