14 November 2005, 16:44   Dollar falls on speculation of ECB rate hike

The dollar fell against the euro in Asian trading on Monday as traders speculated that German and Italian economic growth figures out this week may spur the European Central Bank to hike interest rates. The dollar was little changed against the yen, trading at ?117.98 in Tokyo mid-afternoon, slightly up from the ?117.97 it bought in New York late Friday. The euro rose to $1.1750 from $1.1706 late Friday in New York. Both German and Italian gross domestic product are projected to have grown 0.5 percent in the third quarter, according to economists polled by Dow Jones Newswires. The figures will be released Tuesday. Ahead of the key indicators, "the market is rife with speculation that the data may produce strong enough results to justify rate hikes" by the European Central Bank, said Kazuhiko Fujisaki, vice president of foreign-exchange marketing at Mizuho Corporate Bank. Traders said that the increasingly combative attitude of Japanese politicians toward the Bank of Japan has been hurting the yen's outlook by increasing speculation that it will take much longer for the bank to start raising interest rates from their current near-zero levels. Chief Cabinet Secretary Shinzo Abe told reporters on Monday that "all-out mobilisation" of policy is needed for the world's second-largest economy to overcome deflation, and that the central bank should cooperate by waiting to raise rates.

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