Euro nearly flat on dollar
The euro was nearly flat against the dollar on Friday as investors waited to see how the European Central Bank's rate hike would affect markets.
By Agencies |
GERMANY: The euro was nearly flat against the dollar Friday as investors waited to see how the European Central Bank's rate hike Thursday would affect markets.
The 15-nation euro bought US$1.5707 in European morning trading, up only slightly from the US$1.5699 in late New York trading Thursday.
The British pound was also nearly flat at US$1.9823 compared to the US$1.9829 a pound bought in late trading Thursday. The dollar rose slightly on the Japanese yen, buying 106.83 yen, compared to the 106.77 yen a dollar bought the night before in New York.
The European Central Bank raised its benchmark interest rate to 4.25 per cent from 4 per cent to combat rising inflation in the euro area Thursday. Higher interest rates can slow inflation and at the same time underpin a currency as investors park money where it can earn more interest. Higher rates, however, can also slow growth as money becomes more expensive to borrow.
``The euro did relax slightly on the back of the post-rate verdict conference where (ECB President Jean-Claude) Trichet failed to commit to further rate hikes later in the summer,'' said James Hughes, a currency analyst at CMC Markets in London.
``Looking ahead, with data having been released early to account for the holiday weekend there's very little news on the calendar, but the one factor worth watching _ especially with regard to the greenback's fortunes _ is again going to be oil,'' Hughes said.
The ECB's rate hike could send the dollar lower against the euro which could in turn drive up the price of oil as more buyers move in.
Crude futures rose to US$145.85, a record high, in New York on Thursday before settling at a record finish of US$145.29 a barrel.
Currency analysts are expecting a slow trading day today as US markets are closed for the Independence Day holiday.
The 15-nation euro bought US$1.5707 in European morning trading, up only slightly from the US$1.5699 in late New York trading Thursday.
The British pound was also nearly flat at US$1.9823 compared to the US$1.9829 a pound bought in late trading Thursday. The dollar rose slightly on the Japanese yen, buying 106.83 yen, compared to the 106.77 yen a dollar bought the night before in New York.
The European Central Bank raised its benchmark interest rate to 4.25 per cent from 4 per cent to combat rising inflation in the euro area Thursday. Higher interest rates can slow inflation and at the same time underpin a currency as investors park money where it can earn more interest. Higher rates, however, can also slow growth as money becomes more expensive to borrow.
``The euro did relax slightly on the back of the post-rate verdict conference where (ECB President Jean-Claude) Trichet failed to commit to further rate hikes later in the summer,'' said James Hughes, a currency analyst at CMC Markets in London.
``Looking ahead, with data having been released early to account for the holiday weekend there's very little news on the calendar, but the one factor worth watching _ especially with regard to the greenback's fortunes _ is again going to be oil,'' Hughes said.
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The ECB's rate hike could send the dollar lower against the euro which could in turn drive up the price of oil as more buyers move in.
Crude futures rose to US$145.85, a record high, in New York on Thursday before settling at a record finish of US$145.29 a barrel.
Currency analysts are expecting a slow trading day today as US markets are closed for the Independence Day holiday.
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