The euro fell slightly on profit taking to less than $0.91 in early trading here on Wednesday in a market which was quiet because investors were awaiting publication of US inflation data.
The euro was being quoted at $0.9087 from $0.9130 at the close of trading in New York late on Tuesday.
The euro was being quoted at 99.02 yen from 99.56 in New York on Tuesday and the dollar was at 108.96 yen from 109.05 in New York.
The euro fell to below $0.91 on profit taking but was firm because of a general view that the European Central Bank is likely to raise its interest rates when the governing council meets on August 31 rather than wait until a meeting on September 14 as some analysts had thought.
The head of foreign exchange at the Bank of Tokyo-Mitsubishi, Derek Halpenny said: "The euro is being well supported, having broken above $0.90 but this movement is largely technical in the absence of a new development."
He said that speculation that the ECB would be more aggressive and increase its key rates by half a percentage point on August 31 might explain this.
But such speculation could also weaken the euro on a view that a tightening of rates might undermine growth in Europe.
The head of foreign exchange at BankAmerica, Deborah Reed, said: "The market seems at last to be taking account of the strength of European economic data which might push the ECB to increase its rates."
She also said that the euro was being supported by an auction in Germany for licenses for third-generation mobile telephones "because the winners will need to buy or borrow euros to pay the German government."
However, the firmness of the euro might melt away during the day on publication of US consumer prices, dealers said.
Halpenny said: "The American economy remains the key and recent data on retail sales and industrial output suggest that economic fundamentals still favor the dollar."
Sterling firmed slightly on publication of British employment data and average pay, and of minutes of the last monetary policy meeting at the Bank of England on August 3 which showed that five of nine members of the policy committee had voted to hold the key rate at 6 percent.
The euro was being traded at $0.9087 from $0.913 in New York late on Tuesday, at 99.02 yen from 99.56, 0.6040 pounds from 0.6068 and 1.562 Swiss francs from 1.561.
The dollar was at 108.96 yen from 109.05 and 1.7187 Swiss francs from 1.719.
Sterling was at $1.5045 from $1.5041 in New York, 163.94 yen from 164.02 and 2.5852 Swiss francs from 2.57.
The spot price of gold rose to $275.6 an ounce from $274.15 on the London bullion market on Tuesday. — (AFP)
© Agence France Presse 2000
