Dollar Slips vs. Euro, Up vs. Pound Before Bank Meetings

The U.S. dollar slipped Monday against the euro but edged up against the British pound ahead of European Central Bank and Bank of England meetings later this week.

Dollar and Euro
Dollar and Euro

Both central banks are expected to leave interest rates unchanged.

In late New York trading, the 15-nation euro rose to $1.5497, up from $1.5418 late Friday in New York.

The British pound dipped to $1.9720 from $1.9744 from Friday.

The dollar/yen was unchanged from late Friday at 105.26 Japanese yen.

The euro was helped on sentiment that the European Central Bank and the Bank of England, both of which meet Thursday, are likely to keep their rates unchanged at 4 percent and 5 percent, respectively.

ECB officials continue to remain wary of inflation in the euro zone. Cutting rates can spur inflation.

"On a global level, inflationary risks are significant," ECB President Jean-Claude Trichet said at a global banking meeting in Switzerland, echoing concerns of other central bankers on soaring food prices.

On the other hand, the Federal Reserve last week cut the key U.S. interest rate to 2 percent, but signaled that it may pause its easing campaign in the near term.

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.

Meanwhile, the Institute for Supply Management's index of the U.S. service sector showed a reading of 52 points in April, up from 49.6 in March and better than the reading of 49.3 that analysts had forecast. A reading above 50 indicates growth, while a reading below 50 indicates contraction.

In other New York trading, the dollar fell to 1.0530 Swiss francs from 1.0559 francs late Friday and fell to 1.0135 Canadian dollars from 1.0193.