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According to Reuters, fears over the state of the US auto sector, as well as a record drop in US consumer prices, forced the dollar to fall 1.2 per cent to 95.79 yen.
Meanwhile, the euro also fell against the dollar as part of an overall deepening of worry about the state of the economy, which also led to sharp falls in stock trading on the world's markets.
"The dollar remains bid for its safe-haven status while the yen remains the safety valve against equity market losses. Neither currency can lose much more in terms of yield," commented Andrew Wilkinson, senior market analyst for Interactive Brokers.
This morning saw euro trade at $1.2529 in Europe, compared with $1.2602 in New York late yesterday.
According to Bank of New York analysts, while the US economy is widely known to be in trouble, it is not yet clear how the slowdown is playing out in Europe, reports the Associated Press.
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