The euro gained on the dollar early Friday, which slipped after rallying on strong U.S. economic news, as oil prices jumped on fears tropical storm Gustav will disrupt U.S. refining capacities.
The 15-nation euro rose to US1.4730 in early trading, up from the US$1.4707 it bought in New York late Thursday.
The British pound also continued its slide to US$1.8275, after rallying late Thursday to reach US$1.8284 in late New York trading. That followed the pound's third 25-month low in as many days, when it dropped to US$1.8239 earlier Thursday.
The dollar lost ground to the Japanese currency, slipping to 109.08 yen from 109.56 yen in New York.
Although the U.S. Commerce Department reported on Thursday the fastest growth pace of the U.S. economy in almost a year, spurred by exports and the government's stimulus checks, the jump in oil prices early Friday drove the dollar back down.
Light, sweet crude for October delivery was up US$1.35 at US$116.94 a barrel in electronic trading on the New York Mercantile Exchange early Friday.
Tropical Storm Gustav appears to be headed toward the Gulf of Mexico, unnerving investors as it threatens to disrupt the region's oil production. But speculation that the government may release crude reserves to help keep oil supply steady helped calm fears. The Paris-based International Energy Agency said it would tap emergency stocks if necessary.
Oil has been commonly used this year as a hedge against a falling dollar and inflation. The price of oil and the dollar have tended to trade inversely.
