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Euro, sterling at 3-year highs
LONDON, England -- The dollar fell to three-year lows against the euro and the British pound on Monday as investors braced for a report on Iraq by U.N. weapons inspectors later in the day. Traders are not expecting any surprises from the report but most believe a U.S.-led war on Iraq is unavoidable and would have a negative impact on the American economy. However, many feel the dollar's fall will be short-lived. "There really aren't any factors to further push down the dollar,'' Jun Kitazawa, a foreign exchange specialist at Brown Brothers Harriman, told Reuters. "I think the war factor has pretty much been digested and the effects of it appear to be wearing out.'' In early trading in London on Monday, the euro was trading at $1.0868, the highest level in more than three years, while the pound was at $1.6365, also a three-year high. On Sunday, U.S. Secretary of State Colin Powell told delegates at the World Economic Forum in Davos that the U.S. was willing to attack Iraq alone even if its allies do not support the action. "I think the market has already priced in the possibility of a war,'' said a fund manager. "If a war really happens, the dollar may fall for a short while but maybe that's it. That may be the time to close (dollar-short) positions.''
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