Euro lower against U.S. dollar in late European trading
BERLIN – The euro fell slightly against the U.S. dollar on Monday, beginning the New Year on the same note it set in 2005.The 12-nation European currency slipped to $1.1825 in late European trading, down from $1.1828 late Friday in New York.However, the British pound gained to $1.7229 from $1.7179 on Friday and the dollar was down slightly to 117.78 Japanese yen from 118.01 yen.In 2005, the euro fell 12.7 percent against the dollar, and the pound dropped 10.6 percent versus its U.S. counterpart. The dollar gained 15 percent versus the yen.Exchange rates were driven, above all, by interest-rate decisions and expectations, a situation that could persist into 2006.The U.S. Federal Reserve has raised short-term rates 13 times, opening a gap over rates elsewhere, and making the dollar more attractive. Analysts expect the dollar to stay strong as long as the Fed keeps kicking rates higher.The dollar has gained despite concern about the yawning U.S. current account deficit. The U.S. currency could prove vulnerable if the country’s strong economic growth shows signs of weakening.