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Dollar rebounds as oil prices ease

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NEW YORK (AP) -- The dollar recouped some of the week's losses against the euro and yen as stocks advanced and oil prices retreated. H

NEW YORK (AP) -- The dollar recouped some of the week's losses against the euro and yen as stocks advanced and oil prices retreated. However, the greenback slid against the pound.

The 15-nation euro dropped to $1.5699 from $1.5780 late Wednesday.

Oil prices eased from their overnight record above $135 to settle at $130.81 in New York.

The euro-dollar trade has recently tracked the rise and fall of oil prices. Surging oil has weighed on the global economy, compounding inflation worries and fears that consumers will spend less as fuel takes up a larger part of their income. But Europe's economy is seen as more resilient to sky-high oil than the United States.

The dollar also rose to 105.26 Japanese yen from 104.17 yen and 1.0339 Swiss francs from 1.0272 francs.

When stock markets rise, the dollar tends to rise against these two "carry trade" currencies as investors are more willing to engage in risky trading.

Carry trades involve borrowing a currency from a country with low interest rates, such as Japan, and using those funds to buy higher-yielding assets. The possibility of sharp drops in exchange rates make this strategy risky.

The British pound, meanwhile, rose to $1.9782 from $1.9689 late Wednesday.

The Federal Reserve on Wednesday, in the release of minutes from its April meeting, forecast a softening economy and rising unemployment and inflation in 2008, dampening expectations of a long-term dollar rally.

In other New York trading, the dollar edged up to 98.56 Canadian cents from 98.48 Canadian cents. 

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