Thursday April 2, 12:04 PM
Euro rises versus dollar before ECB rate call
LONDON (AFP) - The euro climbed against the dollar on Thursday as the ECB looked set to slash eurozone borrowing costs to record low levels to help free the bloc of its deepening recession, traders said.
Markets were also closely monitoring the G20 summit in London where world leaders hammered out the first measures of a rescue plan for the global economy.
In London foreign exchange trade, the European single currency rose to 1.3290 dollars from 1.3234 dollars late in New York on Wednesday.
Against the Japanese currency, the dollar climbed to 99.23 yen from 98.54 yen on Wednesday.
"The G20 summit and the ECB monetary policy meeting will of course be the key areas of focus for the foreign exchange market today with the ECB meeting the more likely event to spark volatility in the markets," said Derek Halpenny, European head of global currency research at The Bank of Tokyo-Mitsubishi UFJ.
The European Central Bank is likely to cut its key interest rate to an all-time low of 1.0 percent on Thursday, while it may break new ground by taking unconventional measures to tackle the downturn, traders said.
It is "already clear to everyone that the refi (refinancing) rate will go lower but not much lower" than the current level of 1.50 percent, said UniCredit (Milan: UCG.MI - news) chief eurozone economist Aurelio Maccario.
"The focus has now shifted to the type of other unconventional measures the ECB is ready to embark on," he said.
Efforts to pull the 16-nation eurozone out of its first recession are thought likely to include quantitative easing, essentially creating more money supply to boost economic activity.
Investors are also keenly awaiting US data on unemployment and non-farm payrolls due out Friday.
In the United States on Wednesday, the Institute of Supply Managemement manufacturing Index for March came in at 36.3 percent, essentially in-line with the expected reading of 36.0, and up from the February reading of 35.8.
Pending home sales for February were also up, 2.1 percent from the prior month. They were expected to remain unchanged after declining 7.7 percent in January.
In London trade on Thursday, the euro was changing hands at 1.3290 dollars against 1.3234 dollars late on Wednesday, 131.78 yen (130.43), 0.9111 pounds (0.9162) and 1.5234 Swiss francs (1.5171).
The dollar stood at 99.23 yen (98.54) and 1.1472 Swiss francs (1.1461).
The pound was at 1.4579 dollars (1.4444).
On the London Bullion Market, the price of gold fell to 920.05 dollars an ounce from 924.50 dollars an ounce late on Wednesday.
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