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Euro slips before ECB decision

LONDON - The euro eased Thursday against the dollar as investors awaited an interest rate announcement from the European Central Bank.

In London morning deals, the euro dipped to 1.4503 dollars, from 1.4509 late in New York on Wednesday.

Against the Japanese unit, the dollar increased to 91.91 yen from 91.38 yen late on Wednesday.

Traders were waiting for a monetary policy decision meeting by the European Central Bank and a press conference by its governor Jean-Claude Trichet for clues on prospects for interest rates in Europe.

Markets expect the ECB to hold its key lending rate steady at 1.0 percent and see little prospect of revisions to the bank’s assessment of the economy or when it will halt its policy tool of flooding markets with cash.

At the same time, the eurozone faces an unprecedented internal crisis, with financial woes in Greece and other bloc members putting interest rate talk on the back burner. The ECB decision is due at 1245 GMT.

“Were it not for Greece, today’s meeting and press conference would likely have been a dull affair,” said Calyon analyst Daragh Maher.

“Interest rates will remain unchanged, and there is no real compulsion for Trichet to say anything much different from December’s meeting in terms of economic growth and the outlook for monetary policy.

“But while the Greek PM may argue that outside assistance will not be required, many will wonder quite where the ECB stands were the PM to be proven wrong.

Maher added: “It is hard to imagine any clear-cut stance being offered by the ECB. More likely Trichet will try to side-step it by using language such as ‘we trust the Greek government will take the necessary steps’.

“This will neither placate markets nor unnerve them, most likely leaving the euro just below 1.4590.”

Meanwhile, a lacklustre Beige Book survey on economic conditions in the United States on Wednesday dampened speculation that the Federal Reserve might hike interest rates earlier than expected this year.

The report said data from the 12 Federal Reserve districts showed a “modest” improvement in key areas such as consumer spending, manufacturing and housing.

Elsewhere, the yen was sold after data showed Japan’s core machinery orders slumped a worse-than-expected 11.3 percent in November from the previous month, underscoring moves by companies to slash capital spending.

In London on Thursday, the euro was changing hands at 1.4503 dollars against 1.4509 dollars late on Wednesday, 133.29 yen (132.61), 0.8910 pounds (0.8911) and 1.4802 Swiss francs (1.4775).

The dollar stood at 91.91 yen (91.38) and 1.0204 Swiss francs (1.0180).

The pound was at 1.6275 dollars (1.6281).

On the London Bullion Market, the price of gold rose to 1,136.97 dollars an ounce from 1,127.25 dollars on Wednesday.