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New York: The dollar rallied on Thursday to its strongest against the euro in a week, as investors took profits from oil, gold and other commodities, repatriating their cash back into the beleaguered US currency.
Oil was down almost four per cent, dipping below $100 a barrel and commodities such as gold and platinum may post their biggest weekly losses in years, following a months-long rally.
As investors slashed their "long" exposure to these assets, they covered "short" positions in the dollar, lifting the currency from historic lows charted earlier this week, traders said.
Interconnected
"Commodity markets and currencies are very interconnected and as we see the system deleverage positions in oil and gold, the dollar is bouncing back," said Camilla Sutton, a currency strategist at Scotia Capital in Toronto.
In morning trading in New York, the euro was down 1.2 per cent at $1.5437, well off Monday's record high of $1.5904 and chalking up its steepest one-day fall since early February. Still, the euro is up nearly six per cent on the year.
The dollar also gained 0.4 per cent against the yen to 99.19 yen and bounced 1.6 per cent versus the Swiss franc to 1.0124 francs.
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