Dollar rally fades amid hawkish comments from ECB member
NEW YORK (AFP) — The dollar's rally ran out of steam Wednesday and the euro bounced back from a six-month low amid comments from European Central Bank member suggesting ECB rate cuts are not imminent.
At 2100 GMT, the European single currency was at 1.4737 dollars, up from 1.4653 dollars in New York late on Tuesday, when it hit its lowest level since February.
The dollar was little changed against the yen at 109.65 from 109.67.
Chris Lafakis at Economy.com said comments by European monetary policymaker Axel Weber "are pressuring the dollar" by going against the market logic that rate cuts are coming in Europe to fire up lagging economic growth.
"Weber sees no need for the European Central Bank to lower interest rates any time soon and said the ECB should consider raising interest rates when the European economy strengthens toward the end of this year," the analyst said.
Up to now, markets have been expecting rate cuts from the ECB and hikes from the US Federal Reserve to narrow the rate differential in the two regions.
The dollar failed to get mileage from a better-than-expected reading on US July durable goods orders -- up 1.3 percent against expectations of no gain.
The report "adds to the still nascent optimism that the US economy may be turning the corner," said Samarjit Shankar at Bank of New York Mmellon.
"Even so, it is still too early to sound the all-clear and activity and sentiment indicators remain vulnerable to any deterioration in the news-flow surrounding the ongoing credit crisis, banking sector problems and housing market woes."
In late New York trade, the dollar stood at 1.0965 Swiss francs from 1.0994 Tuesday.
The pound was at 1.8359 dollars after 1.8394.
Jordan Eburne at PNC Bank said sterling was weak "amid speculation that the nation's housing slump could force the central bank to lower interest rates to curtail the slowdown."
"Tomorrow's home price survey will be closely watched, with forecasts showing that house prices fell for a ninth straight month," the analyst said.
