LONDON, Oct 22 - The euro rose against the dollar on Wednesday after upbeat comments from European Central Bank Chief Economist Otmar Issing but the dollar held steady on the yen awaiting comments from U.S. Treasury Secretary John Snow. Issing was reported in a German magazine as saying current interest rate levels were at their lowest since World War Two and had created an environment for far stronger growth. Snow speaks twice in Chicago on Wednesday during a tour of derivatives exchanges, with markets hanging on policymakers' words after an Asia-Pacific Economic Cooperation (APEC) forum this week made no reference to currency policies. "Issing's comments were nothing new but they were used as an excuse to take euro/dollar higher, after the APEC meeting proved slightly disappointing," said Kamal Sharma, currency strategist at Dresdner Kleinwort Wasserstein. "The market is very nervous about Snow, given his recent comments about interest rates." The euro rose a third of a percent against the dollar to $1.1712 by 0735 GMT, testing one-week highs. The dollar was trading at 109.52/58 yen , barely changed from late New York levels and more than one yen above recent three-year lows. Rising commodity prices, part of the global economic reflation trend, helped push the Australian dollar to a six-year high above US$0.70 .
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Operators had been waiting to see if U.S. President George W. Bush, keen on getting support from U.S. manufacturers ahead of an election next year, would push APEC leaders to adopt a message criticising China and Japan for holding their currencies down. "The market is now searching for new factors to trade on after APEC made no mention of forex," said Jun Kitazawa, assistant vice president of forex at Brown Brothers Harriman in Tokyo. Meanwhile, Snow is expected to give a brief on-the-record talk about the economy at around 1350 GMT and deliver a speech to a business group later in the session. On Monday, the currency market was roiled after Snow was reported in British newspaper the Times as saying that he thought interest rates would rise as the economy grew.
The U.S. Treasury and the White House both issued statements saying Snow was not talking about official interest rate policy. Outgoing ECB President Wim Duisenberg speaks in Berlin at 0925 GMT. French consumer spending rose 3.4 percent in September, bouncing back from a sharp drop in August with the biggest monthly rise in over four years, quelling the threat of recession in the euro zone's second largest economy. The market is also waiting for minutes of the October meeting of the Bank of England's Monetary Policy Committee due at 0830 GMT. The BoE left rates unchanged this month, but the minutes are expected to show some members voted to raise interest rates from their current 48-year lows of 3.5 percent. Sterling was keeping a firm tone against the dollar at $1.6755 , half a cent below recent four-month highs, with markets still enamoured with the British currency on rate rise expectations. The Bank of Canada releases its quarterly monetary policy report at 1530 GMT, with the Canadian dollar within half a cent of recent 9-1/2 year highs close to 1.31 per U.S. dollar .//