LONDON (AFX) - The euro slipped against the dollar in early trading, struggling to hold above the 0.94 usd level despite hawkish comments from the European Central Bank's Ernst Welteke, dealers said.
The euro should have received a boost from remarks to a German publication by Welteke, suggesting the ECB was in no hurry to cut interest rates. Audrey Childe-Freeman, economist at CIBC World Markets, said sentiment for the single currency is not positive at the moment.
"I see consolidation below 0.94 (usd) with a bias on the downside," she said.
Childe-Freeman added she expects trading activity to be subdued today as investors await Federal Reserve chairman Alan Greenspan's Senate testimony Thursday. Analysts anticipate the testimony on fiscal policy to provide further clues about near-term rates.
Many expect the central bank will cut rates by at least 25 basis points at its policy meeting next week.
The dollar was firm against the yen following the release of the minutes of the Dec 15 Bank of Japan policy board meeting. Analysts said the minutes offered no major surprises.
Meanwhile, sterling was little changed ahead of the release of the minutes of the Jan 10/11 Bank of England's Monetary Policy Committee meeting. Analysts at WestLB expect the minutes to reveal a further shift in the voting balance, noting the December minutes showed a shift to a 7-2 vote with two members wanting a 25 basis point rate cut.
"Sterling should weaken if more than one MPC member changed his view," they said. Childe-Freeman agreed. "The risk is we see more members pushing for a cut, which would suggest a rate cut is highly probable in February," she said.