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AP, NEW YORK -- The dollar rally took a breather Tuesday after Washington said the U.S. trade deficit shrank and exports rose to a record high, while oil futures edged higher. The 15-nation euro traded almost flat at $1.4926 early in New York, edging lower from $1.4928 in late New York trading Monday. Earlier, the euro zone currency hit a new six-month low of $1.4813.
The 15-nation euro fell below $1.50 on Friday for the first time since February.
The British pound, meanwhile, dropped to $1.9040 from to $1.9120. Earlier in the session, it dropped to its lowest point since November 2006 at $1.8967.
The Commerce Department reported the U.S. trade deficit fell unexpectedly in June to $56.8 billion from $59.2 billion in May, the smallest imbalance in three months, even as oil imports rose. U.S. exports jumped to a record $164.4 billion.
A historically weaker dollar earlier this year helped spark the rise in exports abroad, propping up U.S. gross domestic product. But fears of a global slowdown and a stronger greenback means the trend may not hold.
The dollar slipped to 109.81 Japanese yen from 110.03 yen.
Meanwhile, oil has edged up close to $115 a barrel after oil company BP PLC said it shut down a 90,000-barrel-a-day pipeline running through Georgia as a precaution. The pipeline is closed indefinitely.
This year, oil and the dollar have tended to trade in opposite directions. A weakening dollar drove investors to oil, and boosted the commodity's price. Now sagging oil is making the greenback look more attractive.
The International Energy Agency, a Paris-based energy watchdog, said oil prices would remain high in its monthly report. Demand for oil in developing countries could counteract the demand drop in the developed world fueled by higher prices, and it is too early to say whether the recent drop in oil prices is the start of a downside trend.
But a bump up in oil may not hurt the dollar too badly. Lately, sliding oil prices have ''helped the dollar gain a bit of ground,'' said David Powell, currency strategist for Bank of America Corp. in London. But it's not the primary reason the euro has sold off, and while an increase in oil prices may affect the dollar trade, it won't reverse its recent big gains, he said.
The dollar mostly benefited from the ''sharp downfall in economic data coming out of the euro zone. A rise in oil is not going to change that.''
The euro's slide began last week after the European Central Bank and the Bank of England kept their key interest rates unchanged. ECB President Jean-Claude Trichet acknowledged economic slowdown in the euro zone, with more troubles to come. He gave no signal that a rate hike was planned despite problematic inflation. The British economy has also seen sliding home prices and growing inflation, while the Japanese government has said its economy is weakening as its prices climb.
On Tuesday, the British government said consumer price inflation grew to 4.4 percent in July from 3.8 percent in June. That is double the government's target rate of 2 percent.
Britain and the euro zone are in a bind, as raising interest rates to fight inflation would further tax their economies, while cutting rates in hopes of sparking growth would increase inflation.
Higher interest rates can prop up a currency, as they make a country's assets look more attractive. Investors earn a higher return on their funds there, and can pull money out of assets from countries with lower interest rates.
In other early morning New York trading, the dollar fell to 1.0637 Canadian dollars from 1.0687, but edged higher to 1.0860 Swiss francs from 1.0857 francs.
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