Euro edges higher on dollar

FRANKFURT, Germany – The euro edged higher against the dollar yesterday as investors awaited an interest rate decision from the European Central Bank later this week.

The 15-nation euro bought US$1.5759 in European afternoon trading yesterday. Observers expect to see the dollar slide lower later in the week, as the European Central Bank holds a rate-decision meeting tomorrow.Many economists believe the ECB is likely to raise rates at least a quarter percent to 4.25 per cent amid high euro-zone inflation.The bank has left its key interest rate unchanged at 4 per cent since June 2007.Higher interest rates, used to combat inflation, can strengthen a currency by giving investors higher returns on investments.Lower interest rates can weigh on a currency.Some German economic indicators are picking up in the Euro zone, “which of course is going to add weight to suggestions that the ECB will be in a position to raise its interest rates by a quarter point this week so the improved yields alone will make the common currency look even more attractive, at least in the short term,” said James Hughes, a foreign exchange analyst with CMC Markets in London.He said the euro breaching the record of US$1.6018 “remained in sight,” but overall it would be factors such as “Thursday’s ECB verdict plus the non-farm payrolls on Friday that will likely dictate if we see any significant shift in currency markets this week,” Hughes said.Nampa-APObservers expect to see the dollar slide lower later in the week, as the European Central Bank holds a rate-decision meeting tomorrow.Many economists believe the ECB is likely to raise rates at least a quarter percent to 4.25 per cent amid high euro-zone inflation.The bank has left its key interest rate unchanged at 4 per cent since June 2007.Higher interest rates, used to combat inflation, can strengthen a currency by giving investors higher returns on investments.Lower interest rates can weigh on a currency.Some German economic indicators are picking up in the Euro zone, “which of course is going to add weight to suggestions that the ECB will be in a position to raise its interest rates by a quarter point this week so the improved yields alone will make the common currency look even more attractive, at least in the short term,” said James Hughes, a foreign exchange analyst with CMC Markets in London.He said the euro breaching the record of US$1.6018 “remained in sight,” but overall it would be factors such as “Thursday’s ECB verdict plus the non-farm payrolls on Friday that will likely dictate if we see any significant shift in currency markets this week,” Hughes said.Nampa-AP

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