US dollar weakens as euro shows some strength

Story link: US dollar weakens as euro shows some strength

The Bank of England and European Central Bank were both scheduled to meet Wednesday, but neither were expected to make any change in interest rates. In the UK, sentiment towards sterling was in a bind between inflation worries on the one hand and concerns over slow consumer spending on the other. Meanwhile, in the eurozone, sentiment toward the euro was buoyed by the September purchasing managers’ report, which showed an increase in growth in the third quarter.

The euro gained 0.5 percent to $1.1974 in relation to the US dollar and was up fractionally to ¥136.27 versus the yen. The shared currency was unchanged against sterling at £0.6785, and it dropped 0.1 percent to SFr1.5488 versus the Swiss franc.

The Australian dollar sat at $0.7561 versus the US dollar after having gone as low as $0.7556, a drop of 0.6 percent, earlier in the day. The Reserve Bank of Australia left interest rates at 5.50 percent as expected, but the currency came under pressure from a decline in building approvals in August that was larger than had been expected.

The US dollar weakened against major currencies on Wednesday as continuing comments from officials of the Federal Reserve pointed toward further rate hikes. While analysts see this as good news for the dollar, the market has already taken account of the trend. In addition, trading was seen as subdued over uncertainty about Friday’s upcoming US unemployment figures, which are difficult to predict due to the effect of Hurricanes Katrina and Rita.

The greenback, was down 0.3 percent to $1.7639 in relation to sterling, off by 0.4 percent to ¥113.80 versus the yen, and fell 0.6 percent to SFr1.2964 against the Swiss franc.

Meanwhile, in central European currencies, the Romanian leu was down 0.3 percent to 3.5575 versus the euro, while the Hungarian forint was at 249.60 against the shared currency and the Polish zloty sat at 3.9144 in relation to the euro.