Euro Rises Against Dollar


The euro rose against the dollar, snapping a two-day decline, as traders bet the European Central Bank will keep interest rates at a six-year high this week.

The currency also gained for a second day versus the yen as economists said the ECB will leave borrowing costs at 4 percent after the European Commission raised its inflation prediction. The Australian and New Zealand dollars advanced on speculation rising commodity prices will bolster both countries' exports.

The euro rose to $1.5480 by 10:35 a.m. in London from $1.5424 late in New York on May 2. It traded at 162.94 yen from 162.53 yen. The dollar bought 105.25 yen from 105.40 yen.

The ECB will leave the benchmark refinancing rate at 4 percent when policy makers meet in Athens on May 8, according to all 53 economists surveyed by Bloomberg News.

Consumer price gains will exceed the central bank's ceiling of 2 percent for a 10th year, the European Commission said April 29. German Finance Minister Peer Steinbrueck speaks on public finance later today.

The ECB is winning Europe's political leaders over to its policy of focusing on fighting inflation even as economic growth slows. Politicians from France, Belgium and Luxembourg, who previously complained the ECB paid too little attention to expansion, have signaled increasing concern that higher prices are eating away at voters' incomes.

Futures traders are betting for the first time since December 2005 that the dollar will gain versus the single European currency, figures from the Washington-based Commodity Futures Trading Commission show.


TradingEconomics.com, Bloomberg
5/5/2008 6:40:11 AM