Dollar tumbles; Oil hits new record of US$138 a barrel

NEW YORK, June 6, 2008 (AFP) – The dollar tumbled Friday after a US government survey revealed a much higher-than-expected jump in the nation’s unemployment rate during May to 5.5 percent. Analysts said the report underlined lingering economic woes but noted the Federal Reserve’s precarious position because further interest rate cuts could spur inflationary pressures which have already been stoked by skyrocketing crude oil prices.

Forex Capital Markets senior currency strategist Boris Schlossberg said the dollar had been “crippled” by the employment report which also showed the world’s largest economy shed 49,000 jobs last month.

“Despite (Fed) Chairman Bernanke?s promise to keep rates steady at two percent the Fed may be forced to lower them further if the labor situation continues to deteriorate,” Schlossberg said.

Around 2100 GMT, the euro was at 1.5777 dollars, up significantly from 1.5590 dollars in New York late on Thursday.

Against the Japanese currency, the dollar sank to 104.90 yen from 105.93.

The sharp fall in the dollar contributed to a jump in a key New York oil futures contract, which leapt 10.75 dollars a barrel — the biggest one day jump ever — to