Thursday May 8, 09:39 PM
Dollar almost flat after Europe interest rates unchanged
NEW YORK (AP) - The dollar was slightly lower against the euro and pound late in New York Thursday after central banks in Europe left interest rates unchanged.
The 15-nation euro nudged higher to $1.5404 from $1.5401 after falling as low as $1.5284 earlier in the session. The British pound edged up to $1.9535 from $1.9531.
As expected, the European Central Bank left rates unchanged at 4 percent, even though ECB President Jean-Claude Trichet continued to sound wary of inflation, indicating rate cuts are unlikely in the euro zone despite recent lackluster economic data.
The Bank (NASDAQ: TBHS - news) of England left its rate unchanged at 5 percent, but analysts expect rate cuts later this year.
The dollar fell to 104.17 Japanese yen from 105.26 yen in New York.
Analysts said the dollar was trading near recent gains against the euro on sentiment that the Federal Reserve was likely nearing the end to its volley of rate cuts, which have brought the interest rate down to 2 percent.
'Yesterday's news that U.S. productivity was up by more than expected is precisely the sort of positive signal the market is looking for whilst comments by the Kansas Fed president suggesting that the U.S. economy will recover as quickly as the second half of the year helped further lock in recent gains,' said James Hughes of CMC Markets in London.
Though lower interest rates can spur a nation's economy, they can weigh on its currency as traders transfer funds to countries where they can earn higher returns. And lower rates can also spur inflation, a key concern of ECB officials.
Also helping the dollar a bit was stronger-than-expected U.S. employment data. The Labor Department said those filing for unemployment benefits this week fell by 18,000 from last week to 365,000. Economists had expected 5,000 fewer people to apply for jobless claims.
In other New York trading, the dollar jumped to 1.0176 Canadian dollars from 1.0068, but slipped to 1.0523 Swiss francs from 1.0550.
Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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