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Dollar Steady vs Euro ahead of ECB Rate Decision

Associated Press
Monday, 7 Apr 2008 | 11:52 AM ET

The U.S. dollar held steady against the euro Monday in European trading at the start of a week that will see the latest interest rate decision from the European Central Bank.

The euro was slightly lower versus the dollar, compared to its level in New York late Friday, when it was boosted by U.S. data that showed bigger-than-expected job losses in March.

The British pound slipped against the dollar, while the dollar climbed versus the Japanese yen .

Worries about a possible U.S. recession have raised prospects that the Federal Reserve may cut interest rates even as the European Central Bank leaves the cost of borrowing unchanged.

Lower interest rates can weigh on a nation's currency as traders transfer funds to countries where they can earn higher returns.

The ECB meets to set rates on Thursday, and is expected to keep them on hold again given that euro-zone inflation reached a record 3.5 percent in March - far above the bank's guideline of 2 percent.

ECB President Jean-Claude Trichet underlined the bank's stance on Friday, saying that "price stability is something which is essential for the poorest and the most vulnerable of our citizens."

Data released Monday appeared to underscore the European economy's relative health - showing that German industrial production rose by 0.4 percent on the month in February on a seasonally adjusted basis, defying economists' expectations of a 0.4 percent drop.

The Bank of England also decides on rates this week.

Meanwhile, "the scope for the Fed to cull rates further at this month's meeting cannot be ignored," said James Hughes, an analyst at CMC Markets.

The euro remains within sight of its all-time high of $1.5904 set March 17.

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