updated 11/8/2004 7:36:41 AM ET 2004-11-08T12:36:41

The U.S. dollar fell to an all-time low against the euro Friday as European political leaders signaled they have no unified plan to stem the rise in the five-year-old currency used by 12 countries.

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Currency traders shrugged off positive U.S. employment data that in other times has boosted interest in the dollar, which has been burdened by high oil prices and the U.S. budget deficit.

The euro reached a new high of $1.2962 Friday in late New York trading. It had reached its previous peak of $1.2927 in February. That means that each dollar now buys only about three quarters of a euro. When the shared currency was introduced in 1999 it was pegged at 1 to 1 against the dollar.

The Labor Department reported Friday that October payrolls gained 337,000, and the failure of the currency market to react to the news shows the weakening dollar is a long-term trend, said Dan Katzive, foreign exchange strategist for UBS AG.

“It’s a structural theme,” Katzive said. “The price action today bore that out.”

The dollar’s decline cuts two ways for Americans: It’s a shot in the arm for exporters like Caterpillar Inc., but it boosts the cost of European vacations and could lead to higher prices for goods imported from France, Germany, Italy and the other euro nations. U.S. companies such as Estee Lauder Cos., 3M Co., Avon Products Inc. and Samsonite Corp. have profited from a weak dollar.

In Europe, the stronger euro has raised fears that it will dampen what has been a moderate economic recovery because of a slowdown in exports. The euro is now 57 percent above its all-time low against the dollar of 82 cents from October, 2000.

French President Jacques Chirac said on Friday that he is “a little bit worried about the weakness of the dollar,” and hinted the European Union should take action. “This should provoke certain reactions on our part,” he said during a summit of European leaders in Brussels.

But Chancellor Gerhard Schroeder of Germany — whose economic recovery has been fueled by strong export growth — told reporters at the summit that he sees no reason for “serious concern,” adding that the exchange rate “is not yet dramatic.”

Analysts said that amounted to a green light for currency traders to press their bets because it is unlikely the Treasuries of those countries and the European Central Bank will intervene to reverse the euros rise.

Commerzbank economist Christoph Balz said he expected to see the euro hit $1.31 in the next couple of months, but to settle in the long-term. “The U.S. economy is stronger than people think, which will lead to higher interest rates and make the dollar more attractive,” he said.

In addition, many analysts believe the Bush administration has deliberately sought a lower dollar in order to help U.S. exports.

The ECB has kept its key euro-zone interest rate unchanged for 17 consecutive months at 2 percent. Most analysts still bet the bank will not raise interest rates for several quarters.

After the ECB held rates steady at its meeting Thursday, bank president Jean-Claude Trichet declined to comment on the euro exchange rate, other than to warn that the bank didn’t like sudden moves. “Excessive volatility and disorderly movements in exchange rates are undesirable for economic growth,” he said.

The dollar fell broadly Friday against other major currencies. In late New York trading, the British pound was worth $1.8563, up from $1.8437 late Thursday. The dollar bought 105.65 yen, down from 106.08; 1.1776 Swiss francs, down from 1.1876; and 1.1976 Canadian dollars, down from 1.2072.

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