Euro rises against dollar after ECB decision

AP News
Posted: Jun 06, 2012 3:58 PM
Euro rises against dollar after ECB decision

The euro rose against the dollar Wednesday after the European Central Bank left its benchmark lending rate unchanged. Traders also sold dollars on rising speculation that the Federal Reserve might launch another round of bond-buying to help stimulate the U.S. economy.

Some economists expected the ECB to cut rates to help ease Europe's debt crisis, but bank President Mario Draghi said it's also up to governments to come up with a solution.

In the U.S., Atlanta Fed President Dennis Lockhart said in a speech Wednesday that monetary actions need to be considered if the economy weakens further.

The Fed has launched two rounds of bond purchases, most recently in August 2010, to lower long-term interest rates and make stocks more attractive to investors.

Lower rates can weigh on a currency, however, by reducing the returns investors get from holding it. With a third round of bond-buying apparently being considered, investors sold dollars.

Traders will be closely watching Fed Chairman Ben Bernanke when he testifies before a congressional committee Thursday. Traders will be looking to see if he offers any hints that the Fed is considering more monetary stimulus.

The euro rose to $1.2546 in late trading Wednesday from $1.2446 late Tuesday.

The British pound rose to $1.5486 from $1.5369. The dollar fell to 0.9571 Swiss franc from 0.9651 Swiss franc and to 1.0287 Canadian dollar from 1.0384 Canadian dollar.

The dollar rose to 79.18 Japanese yen from 78.73 yen.