A Whole New Currency Game

Traders now take their cue from stocks and merger news

It's not every day that you can see just how currency markets work in the New Economy. Feb. 3 was one such day, though. When the European Central Bank hiked euro zone rates a quarter point at 11:30 a.m., the euro defied convention and dropped against the dollar. But when news emerged later in the day that British mobile giant Vodafone AirTouch PLC was about to prevail in its $183 billion takeover of German rival Mannesmann, the euro advanced nearly 2.5 cents against the dollar, to 99.5 cents.

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