NEW YORK (AFP) — The dollar showed scant movement against the euro Wednesday as dealers interpreted remarks by the head of the European Central Bank as meaning the ECB would not be cutting interest rates anytime soon.
Attention focused on the ECB after the US Federal Reserve slashed borrowing costs on Tuesday to 3.50 percent following sharp falls on global stock markets.
The euro was swapping hands at 1.4627 dollars around 2200 GMT, little moved from 1.4628 dollars late Tuesday.
The euro had jumped sharply against the dollar a day earlier after the Fed, in a surprise move, cut its key federal funds short-term interest rate by an unprecedented three quarters of a percentage point amid increasing fears of a US recession.
The dollar appreciated Wednesday against the Japanese currency, climbing to 106.76 yen, compared with 106.45 late Tuesday.
The euro held steady against the dollar after ECB head Jean-Claude Trichet insisted the central bank's mandate was to keep eurozone inflation in check, remarks taken to mean the ECB would not be cutting interest rates in the near term.
TradIndex.com trader Mic Mills said it was "surprising" the dollar had held up so well given the Fed's drastic move, adding this reflected how uncertain and volatile market conditions were.
"There is quite a bit of risk-aversion knocking around," he said, noting that speculators often buy US dollars as a so-called safe haven during periods of economic and market turbulence.
Traders said speculation was mounting that the Fed will cut rates again by a further 50 basis points at its scheduled meeting next week. Some analysts said they felt the ECB could be forced to also cut rates in the near future in the face of a slowing 15-nation eurozone economy.
"The ECB would prefer to wait as long as it can but events may overtake them too fast. If growth momentum continues to fold and markets collapse, the ECB will be pressed into quick action," said David Brown at Bear Stearns.
In late New York trading, the dollar was trading at 1.0913 Swiss francs, down from 1.0948 a day earlier.
The British pound stood at 1.9564 dollars, down from 1.9611.
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