LONDON (AFX) - The euro was marginally stronger than morning levels in midday trade as the bearish outlook for the US economy - after comments by Federal Reserve chairman Alan Greenspan yesterday - continued to pressure the dollar, dealers said.
"We are sort of in the middle of the range. It is still a reaction to Greenspan yesterday and some lingering concerns about Latin America," Jeremy Hawkins, chief economist Europe at Bank of America, said.
"The US treasury has been out reiterating that there has been no change in the dollar policy," he added.
Dealers said that previous declines in the euro after rallies had put a top on the euro's gains.
"People are still cautious about this rally and some try to justify it by pointing to falling oil prices, but it seems as though Greenspan's comments woke people up to the fact that the US economy is weak," Michael Lewis, a currency strategist at Dresdner Kleinwort Wasserstein said.
"The euro could be hit if stronger numbers come out of the US," he added.
Economists said they do not think the ECB will cut rates today. "I have no idea how the ECB's mind operates but I don't think that they will cut today," Lewis said, echoing the view held by his peers. Sterling was slightly stronger against the dollar and a touch weaker against the euro after a string of UK economic data.
"Sterling has been sidelined today. The UK numbers should be strongly positive. Trade figures show a bilateral surplus with Europe, weakening the argument of people who say sterling is aggressively overvalued," Hawkins at Bank of America said.
"The British Bankers' Association data suggest that lending is starting to slow and credit card borrowing more than halved, indicating that the buoyancy on the consumer side is starting to slow," he added. Lewis of Dresdner Kleinwort Wasserstein said: "Sterling and cable are trading on what euro-dollar is doing."
The BBA said total sterling lending by major British banks to the UK private sector rose by a seasonally-adjusted 5.773 bln stg in June, compared with a 7.352 bln stg rise the previous month. Meanwhile credit card borrowing rose by 101 mln in June, compared with a 249 mln increase in May.
UK provisional M4 money supply was up 1.0 pct in June on a seasonally-adjusted basis from May and was 7.7 pct higher than in the same month a year earlier.
There was a public sector net cash requirement deficit of 8.166 bln stg in June, compared with an upwardly revised deficit of 2.543 bln the month before, and a 7.038 bln deficit in the same month a year ago. Some of the other data released were: Trade, mortgage lending and motor vehicle production.