Euro breaks $1.20 mark

THE euro leapt to a lifetime high against the dollar on Friday, rising above $1.20 for the first time since its launch in January 1999 as investors sought to capitalise on bearish sentiment towards the US currency.

The euro gathered momentum on the back of last week's peak at $1.1978, breaking the psychological $1.20 level as the expiry of sizeable currency options contracts drove a thin, post-Thanksgiving market.

The dollar has struggled across the board in recent days as upbeat economic data from the United States failed to dispel concerns the country needs a weaker currency to reduce its vast current account deficit.

"In the past few weeks there has been an increased focus on US deficit problems and trade disputes," said Bilal Hafeez, currency strategist at Deutsche Bank.

"The market has priced in good news on the macro side."

The latest lurch lower in the dollar which also hit a five-year low against sterling and a 10-year low against the Canadian dollar comes amid persistent concerns over the United States' funding situation and its vulnerability to geopolitical risk.

Japan's Finance Ministry said it threw almost 1.6 trillion yen at the foreign exchange in November in an attempt to halt any strengthening of its currency.

Japanese authorities fear a strong yen could hurt exports, hindering the economy's tentative recovery.

In contrast, the German economy ministry said the euro's exchange rate gave no grounds for concern.