LONDON (AFP) — The euro steadied against the dollar and rose against other major currencies on Thursday shortly before the European Central Bank was to announce a decision on eurozone interest rates.
The ECB was widely expected to raise its key interest rate by a quarter of a percentage point to 4.25 percent to help battle record inflation within the eurozone. The decision was due at 1145 GMT.
Market players were also awaiting the publication on Thursday of key US jobs data. US Treasury Secretary Henry Paulson said on Thursday that the US economy would most likely be stronger at the end of 2008 than it is now.
The European single currency stood at 1.5875 dollars in morning London trade compared with 1.5876 dollars in New York late on Wednesday.
Against the yen, the dollar gained to 106.28 yen from 105.84.
"With the euro trading close to its year highs against the dollar and a busy day of events, the major exchange rates are likely to be very volatile today (Thursday)," said Barclays Capital economist David Woo.
"We expect a hawkish message from the ECB and slightly better US payrolls than the consensus forecast. But there is a lot of uncertainty surrounding these releases and given the current level of the euro versus the dollar, we think the risk favours further (euro) appreciation" on Thursday, he added.
The market was jittery ahead of the US employment figures after a report showed the US private sector lost 79,000 jobs last month, raising fresh fears about the health of the world's largest economy.
"I think there is a very strong possibility that we (the US economy) will be growing at the end of the year," Paulson said in London on Thursday during a press conference following talks with his British counterpart Alistair Darling.
"We will have stronger growth at the end of the year than we have right now," he added.
Also on Thursday, the Swedish central bank raised its key interest rate by a quarter of a percentage point to 4.50 percent to contain inflation, and signalled further increases to come later this year.
"Inflation has risen substantially and is at its highest level since the mid-1990s," the Swedish Riksbank said in a statement.
"The main reason for high inflation is that energy and food prices in the world market have increased so much."
In morning London trading on Thursday, the euro changed hands at 1.5875 dollars against 1.5876 late on Wednesday, at 168.79 yen (168.05), 0.7995 pounds (0.7966) and 1.6112 Swiss francs (1.6104).
The dollar stood at 106.28 yen (105.84) and 1.0144 Swiss francs (1.0141).
The pound was at 1.9881 dollars (1.9925).
On the London Bullion Market, the price of gold climbed to 941.42 dollars per ounce from 937.50 dollars late on Wednesday.
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