Dollar plunges on euro rate hike talk

Reaches year-and-a-half low against European currency; Bonds gain as stocks slip.

NEW YORK ( -- The dollar took a plunge Friday as there were signs that the European Central Bank would likely continue to raise interest rates next year, sending American markets tumbling and giving a boost to Treasury bonds.

The euro rose to $1.3105 against the dollar, reaching a one-and-a-half-year high, up from $1.2940 Wednesday. The dollar bought ¥115.78, down from ¥116.74 in the previous session.


Data from Germany showed strong economic growth - and the prospect of inflation - which prompted investors to expect rate hikes from the European Central Bank next year. That sent the euro climbing against the dollar and U.S. stock markets tumbling.

There were no major economic reports scheduled Friday.

In Treasurys, the benchmark 10-year note added 4/32, or $1.25 on a $1,000 note, to yield 4.55 percent, down from 4.57 percent Wednesday.

The 30-year bond price rose 7/32, or $2.18 on a $1,000 bond, yielding 4.63 percent, down from 4.64 percent in the previous session. Bond prices and yields move in opposite directions.

The five-year note gained two ticks, to yield 4.55 percent, while the two-year slipped two ticks, yielding 4.77 percent.

The bond market closed early, at 2 p.m. ET.


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