The dollar lost more than 1pc against the euro overnight as concern over the economy increased again ahead of a key report tomorrow. At 0845, the euro was trading at USD1.0515 on the greenback, up from just USD1.0393 yesterday afternoon. A statement from blue chip metals firm Alcoa that it plans to axe more than 8,000 jobs over the coming year hit the dollar hard ahead of tomorrow's December unemployment report from the US government. The labour report is expected to show that the unemployment rate remained at an eight-year high of 6pc last month. The market was also reacting to comments from PIMCO, one of the US' largest fund managers, that the US should welcome the dollar depreciation, while there was also concern over George Bush's USD674bn tax plan. Although it makes sense from a political point of view, questions over the long term impact of the proposal has divided economists. Almost half of the money will be spent on eliminating taxes on share dividends, which could make it more difficult for the US to reduce its huge deficit as the attraction of a tax free equity market could take money out of bonds. "If the US wants to offset the federal deficit by issuing bonds, it will have to pay more to attract individuals," said Niall Dunne, economist at Ulster Bank. //www.fxcentre.com