Euro slips against dollar in Thursday trading
FRANKFURT, Germany ” The euro slipped further Thursday against the dollar as speculation continued about American and European interest rates and German business confidence dipped.
The 12-nation currency bought $1.1785 in afternoon European trading, down from $1.1809 late in New York the night before after business sentiment in Germany fell for the first time in three months.
The German data will likely fuel debate over whether the European Central Bank, which is expected to raise its key interest rate next week, will be able to push through more rate increases through next year.
The British pound was at $1.7236, up slightly from $1.7234, after Bank of England Governor Mervyn King told British lawmakers that there were indications the country’s economy was starting to pick up.
The dollar bought 118.87 Japanese yen, up from 118.78 yen.
U.S. markets were closed because of the Thanksgiving holiday.
The dollar had rallied against the euro in the last two weeks, but dropped sharply Tuesday after minutes from a Nov. 1 meeting showed some Fed policy-makers have concerns that the bank could go too far in its efforts to raise interest rates.
At the same time, the ECB has indicated it is ready to start raising rates from the 2 percent where it has stood since mid-2003. The Fed has boosted its rate up to 4 percent with 12 consecutive hikes.
In Madrid, Spain, ECB Governing Council Member Jaime Caruana said he expected a moderate increase, alluding to the council’s meeting on Dec. 1.
Caruana said an interest rate hike would be good for the Spanish economy, which has one of the euro zone’s highest rates of consumer and housing price inflation.
Raising interest rates make a nation’s currency more attractive by increasing the return on investments.