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U.S. Dollar Continues to Fall, Hits 20-Month Low Against Euro

The U.S. dollar fell to a fresh 20-month low against the euro Monday, carrying over its weakness Friday when weak U.S. factory data reinforced expectations for Federal Reserve rate cuts next year.

The dollar slumped to a 14-year low against the British pound and a 20-month low against the euro Friday after the Institute for Supply Management's survey of U.S. national manufacturing in November showed its key index at its lowest point since April 2003 at 49.5.

"The bad numbers came at a time when market sentiment was tilted toward selling dollars," said a senior trader for a foreign investment bank. "It helped accelerate the selling,". He added that the dollar could see further declines this session after falling below 115.00 yen for the first time in nearly four months Friday.

In early Asian trade Monday, the euro stands at $1.335 while the Japanese yen is trading in the mid-115 range after falling as low as 114.97 yen on Friday. The strength of the yen is pushing stocks of exporting companies like Kyocera lower.

In the latest European comments on the euro's strength, French Budget Minister Jean-Francois Cope said in an interview broadcast on TV5 television and Europe 1 radio on Sunday that the euro is "slightly strong" but is not hurting growth.

Mr. Cope's comments were more upbeat than those last week of French Finance Minister Thierry Breton, who said EU finance ministers needed to talk about "collective vigilance" after the euro moved beyond $1.30.