The U.S. dollar slipped slightly against the euro Wednesday from its rally earlier in the week, after a speech by U.S. Federal Reserve Chairman Alan Greenspan failed to keep the dollar aloft.
The euro bought US$1.2889 in late morning trading, up from US$1.2868 late Tuesday in New York. The pound continued to rise to US$1.8816, up from US$1.8808 in New York, maintaining strength mustered when British Prime Minister Tony Blair called for May 5 national elections on Tuesday.
The dollar rose against the Japanese yen, buying 108.29 on Wednesday, down from the 108.14 yen it brought in New York, regaining ground lost after Japan's central bank announced that its decision to keep its high-liquidity monetary policy unchanged wasn't unanimous.
On Tuesday, the euro fell as low as US$1.2799 in New York trading, its lowest point since Feb. 10, before Greenspan said in a speech to the National Petrochemical and Refiners Association meeting in Texas that high oil and natural gas prices have put energy markets under a degree of strain that hasn't been seen in a generation.
The market is expecting the U.S. Federal Reserve to keep raising interest rates this year, helping nudge the dollar higher, despite nagging worries about the U.S. trade and budget deficits that have weighed on the dollar.
After languishing last year, the dollar has been boosted lately by the expectations of higher U.S. rates, which tend to make securities denominated in dollars relatively more attractive.
The European Central Bank, which sets monetary policy for the 12 euro countries, holds a council meeting Thursday in Frankfurt. No change in interest rates is expected, but the bank's comments will be closely watched.
The Bank of England meets the same day to decide whether it should adjust its interest rate.