Euro at 15-month high as investors wait for ECB

The euro hit a 15-month high against the US dollar Wednesday, a day before the European Central Bank (ECB) was widely expected to increase interest rates in the euro bloc.

Central banks raise interest rates to curb inflation, and ECB officials have expressed concern about rising food and energy prices.

Investors and analysts expect that ECB policymakers will lift the key rate to 1.25 per cent from 1 per cent on Thursday.

Higher rates also tend to increase demand for the currency linked to that country or region. The United States Federal Reserve, meanwhile, is not expected to lift rates yet.

dollar down

In early afternoon trading in New York, the euro rose to as high as US$1.4349, its strongest level since January 2010, from US$1.4220 late Tuesday.

The dollar was mixed in other trading, rising against the yen but slumping against most other major currencies around the world.

The dollar last month hit a six-month high of 85.52 yen in the aftermath of a coordinated intervention by the world's major central banks to weaken the yen.

In later afternoon trading Wednesday, the dollar fetched 85.29 yen, up from 84.82 yen on Tuesday. The British pound rose to US$1.6335 from US$1.6283, while the dollar dropped to 0.9174 Swiss francs from 0.9260 Swiss francs.

The dollar was significantly lower Wednesday against currencies of countries that are big commodity exporters — such as Canada, Norway and Australia — as oil prices rose to a 30-month high, above US$109 a barrel.

Currencies of countries that are major exporters of crude, grains and other raw materials have risen as commodity prices have rallied this year.

The dollar fell to its lowest level against the Canadian dollar since November 2007, at 95.65 Canadian cents, and to a 28-year low versus the Australian dollar, which was worth as much as US$1.0454 Wednesday.

In later afternoon trading, the dollar fell to 95.88 Canadian cents from 96.33 cents late Tuesday.

- AP