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London (pte020/05.07.2005/12:20) - Following comments from European Central Bank official Christian Noyer, the euro fell to the lowest it has been to the dollar in a year. The comments from the ECB http://www.ecb.int have again caused concern about the future stability of the 12-nation euro zone.
The euro zone has been struggling since two EU leaders rejected the constitution and discussion on the EU's long-term budget floundered.
Noyer's remark, in which he said it was possible for a nation to leave the euro bloc, pushed the euro down. "The main feature is still the positive dollar backdrop," said Stuart Ritson, currency strategist at Rabobank in London. "But today the key focus is on comments from Noyer which gave the dollar a push against the euro."
Trading was quiet due to the 4th of July holiday in the US, but the euro traded more than half a per cent weaker, at $1.1895, after sliding below $1.19 and hitting its lowest level since late May 2004 at $1.1888.
Despite analysts' careful optimism about the euro zone staying united, investors remain edgy, selling the euro after Noyer's comments.
In addition, contrary to urging from EU politicians, the ECB is expected to keep interest rates at 2 per cent. The announcement will be made on Thursday.
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