The dollar continued its fall against the euro this afternoon, failing to react to a survey that showed manufacturing activity in the New York area managed a slight expansion in November.

The New York Federal Reserve Bank’s Empire State Manufacturing index rose to 19.8 in November from 17.4 in October. The survey overall was mixed, however, showing improved shipments and prices, but a decline in new orders, employment and prices paid.

One euro was worth $1.2963 this afternoon, compared with $1.2959 this morning. One pound is worth $1.8538.

A tranch of better-than-expected US data - including Friday’s retail sales report and the University of Michigan consumer sentiment survey - has failed to support the dollar in recent days.

Analysts have pointed out that the dollar has failed to react to positive news as concern over America's record high current-account deficit has remained the overriding factor influencing currency movements.

"Foreign investors have continued to focus on structural issues including the record US current account deficit, concerns that both the Fed and the US Treasury want the dollar weaker and worries that a second Bush administration will not control the large US budget deficit," UBS analyst Mansoor Mohi-uddin told AFP.

The American currency had gained some support earlier in the after after Treasury Secretary John Snow told reporters in Dublin that Washington saw a strong dollar as being in the country’s interest, although he said dollar movements must be determined by foreign exchange markets.

Market focus will also centre on the meeting of European finance ministers today and tomorrow, ahead of this weekend’s G20 meeting in Berlin.

Policymakers are likely to comment adversely on the renewed strength of the euro, said Mr Mohi-uddin, but said any such remarks are unlikely to have much impact on currency markets.

"Given the lack of coordination and coherence recently, such commentary may ultimately damage Europe’s ability to jawbone the market effectively," he said.

Speculation in America since the presidential election has suggested that Washington would maintain its policy of "benign neglect" towards the dollar. A weaker dollar would aid exporters and redress its trade deficit, at the expense of manufacturers in Europe and Asia.

The dollar had fallen to a seven-month low against the Japanese yen and a nine-year low against a basket of major currencies in Asian trading this morning.

"Currency values are best set in open and competitive exchange markets," Secretary Snow said. "We support a strong dollar. A strong dollar is in America’s interest."

The dollar made gains against the euro following Mr Snow’s comments, the euro falling to $1.2959.

Markets were awaiting the European finance ministers meeting in Brussels later today to see if they turn up their rhetoric against a further rise in the euro which would undermine exports.

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