USD gains on pound, weakens versus euro

Story link: USD gains on pound, weakens versus euro

The US dollar weakened in relation to the euro on Thursday after seeing earlier gains against the shared currency on data showing that industrial production was down in both France and Italy in May.

The declines for the greenback came on fears of more losses in the financial sector on mixed signals about the health of mortgage lenders Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE).

While US Treasury Secretary Henry Paulson told Congress that he has been told that both lenders have sufficient capital, the president of the St. Louis region Federal Reserve has said that the possibility that the two might need a government bailout is increasing.

In late morning trade in New York the dollar traded at $1.5782 to the euro while the yen weakened versus the greenback to ¥107.0050 to the dollar.

The pound was weaker versus both the dollar and the euro after the Bank of England held interest rates steady at 5 percent for a third consecutive month.

It cost $1.9774 to buy a pound while the UK currency traded at 79.81p to the euro.

Meanwhile, the South African rand strengthened on continued enthusiasm over merger talks involving the telecommunications sector and even though manufacturing growth slowed there in May.

The rand most recently traded at R7.7205 to the US dollar.