NEW YORK: The euro remained near a 17-month high above $1.48 on Monday, May 2 as surprisingly strong manufacturing data in the euro zone bolstered the chances interest rates there could rise again to fend off inflation.
That contrasted with the situation in the United States, where the Federal Reserve is signaling it is in no rush to raise borrowing costs.
The dollar rose briefly and oil prices fell overnight after U.S. forces said they had killed al-Qaeda leader Osama bin Laden, but traders said the news was not enough to reverse the dollar-selling trend that has pushed the currency in recent weeks toward a record low against its major rivals.
"We've come a long way without a correction but there's really no sign of anything that would pull the euro lower right now," said Shaun Osborne, senior strategist at TD Securities. "We might take a look at $1.50" before any correction occurs.
At this point, he said every European Central Bank meeting carries at least the risk of a rate hike, though he predicted authorities would stand pat this month after hiking in April.
The ECB holds its monthly policy meeting on Thursday.
"In the end it's monetary policy expectations which are the driving force for dollar weakness," said Marcus Hettinger, currency strategist at Credit Suisse in Zurich.
The impact of bin Laden's death was ultimately negligible for the dollar, he said.
The euro was last up 0.3 percent at $1.4834, off a $1.4760 session low and not far from a 17-month high just short of $1.49 hit last week.
Traders cited demand from a UK bank and European sovereign names but added that flows were scarce due to market holidays in parts of Asia and in Britain.
The dollar edged up 0.3 percent to 81.45 yen while the Australian dollar hit a new post-float high above $1.10 before easing to $1.0944, down 0.2 percent.
Against a basket of six major currencies, the dollar was trading at 73.024 after hitting 72.813 in the Asian trade, its weakest since hitting an all-time low in mid-2008.
A sharp fall in silver prompted some profit-taking in the Aussie and other high-flying commodity currencies including the Canadian dollar, which pulled back from a 3 1/2-year high versus it U.S. counterpart..
European manufacturing data continued to boost the notion that growth in the 17-country euro zone's core economies was strong, boosting the case for higher rates.
U.S. manufacturing data is due at 10 a.m.
The death of the al Qaeda leader was seen as positive for Washington, which had been hunting him for nearly a decade.
World leaders called for vigilance toward any possible retaliation. Analysts said such action could be positive for the dollar if it provoked a flight to safety toward the U.S. currency but added this was unlikely for the moment.
"An event like a retaliatory action would be dollar positive if it affects risk sentiment. But risk as a driver of the FX market has been much less than it has been," said Kasper Kirkegaard, currency strategist at Danske in Copenhagen. - Reuters
That contrasted with the situation in the United States, where the Federal Reserve is signaling it is in no rush to raise borrowing costs.
The dollar rose briefly and oil prices fell overnight after U.S. forces said they had killed al-Qaeda leader Osama bin Laden, but traders said the news was not enough to reverse the dollar-selling trend that has pushed the currency in recent weeks toward a record low against its major rivals.
"We've come a long way without a correction but there's really no sign of anything that would pull the euro lower right now," said Shaun Osborne, senior strategist at TD Securities. "We might take a look at $1.50" before any correction occurs.
At this point, he said every European Central Bank meeting carries at least the risk of a rate hike, though he predicted authorities would stand pat this month after hiking in April.
The ECB holds its monthly policy meeting on Thursday.
"In the end it's monetary policy expectations which are the driving force for dollar weakness," said Marcus Hettinger, currency strategist at Credit Suisse in Zurich.
The impact of bin Laden's death was ultimately negligible for the dollar, he said.
The euro was last up 0.3 percent at $1.4834, off a $1.4760 session low and not far from a 17-month high just short of $1.49 hit last week.
Traders cited demand from a UK bank and European sovereign names but added that flows were scarce due to market holidays in parts of Asia and in Britain.
The dollar edged up 0.3 percent to 81.45 yen while the Australian dollar hit a new post-float high above $1.10 before easing to $1.0944, down 0.2 percent.
Against a basket of six major currencies, the dollar was trading at 73.024 after hitting 72.813 in the Asian trade, its weakest since hitting an all-time low in mid-2008.
A sharp fall in silver prompted some profit-taking in the Aussie and other high-flying commodity currencies including the Canadian dollar, which pulled back from a 3 1/2-year high versus it U.S. counterpart..
European manufacturing data continued to boost the notion that growth in the 17-country euro zone's core economies was strong, boosting the case for higher rates.
U.S. manufacturing data is due at 10 a.m.
The death of the al Qaeda leader was seen as positive for Washington, which had been hunting him for nearly a decade.
World leaders called for vigilance toward any possible retaliation. Analysts said such action could be positive for the dollar if it provoked a flight to safety toward the U.S. currency but added this was unlikely for the moment.
"An event like a retaliatory action would be dollar positive if it affects risk sentiment. But risk as a driver of the FX market has been much less than it has been," said Kasper Kirkegaard, currency strategist at Danske in Copenhagen. - Reuters
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