Euro slumps to fresh 16-month low on US jobs data

The euro tumbled to yet another 16-month dollar low on Friday as the single currency's fortunes were hit by positive US jobs data and ongoing fears over the eurozone debt crisis. At 1400 GMT, the shared currency dived as low as $1.2725, which was last seen on September 13, 2010. It also sank to 98.21 yen, which was the lowest level since December 2000. The US unemployment rate dropped to 8.5 percent in December, the lowest level in nearly three years, as hiring surged more than expected, official data showed on Friday. The economy added 200,000 nonfarm jobs last month, the Labor Department said. That was sharply higher than the average analyst estimate of 150,000. "The euro continued its spiral downwards today as US nonfarm payrolls came in at a very healthy 200,000 jobs and the unemployment rate fell to its lowest level since February 2009," said analyst Ian O'Sullivan at traders Spread Co. He added: "We still think $1.270 is going to go and we may see $1.25 hit within a few weeks at this rate. The United States continues to produce healthy economic numbers as Europe teeters on the brink of collapse." The eurozone's debt-wracked economies came under renewed pressure Friday as more bad economic data undermined leaders' attempts to reassure markets that an end to the crisis is in sight. Meanwhile, nervous European banks parked a record 455 billion euros in the safe haven of the European Central Bank overnight, preferring to earn low interest rather than take the risk of lending to each other. Traders are on red alert that the eurozone debt crisis -- which has already resulted in enormous EU/IMF bailouts for Greece, Ireland and Portugal -- could also strike the far-larger economies of Italy and Spain. The euro was also slammed this week after the Greek government warned on Wednesday that it faced an "uncontrolled default" in March -- unless unions and employers can quickly agree on labour cost cuts to boost competitiveness. In another gloomy development on Friday, the Fitch ratings agency downgraded Hungary to junk status and warned that its unorthodox policy measures made reaching an aid deal with the International Monetary Fund more uncertain.