Euro Rises

The euro rose, rebounding from a seven-week low against the dollar, on speculation European Central Bank President Jean-Claude Trichet will signal higher interest rates may be needed to combat inflation.

The 15-nation currency also advanced against the yen before the ECB's meeting tomorrow, at which it's forecast by analysts keep its key interest rate at 4.25 percent. Australia's dollar declined to a four-month low and Canada's currency traded near its weakest in almost a year as prices of commodities the nations export fell. Taiwan's dollar dropped the most in more than two months on bets the island's economic growth will slow.

The euro rose to $1.5468 at 6:30 a.m. in New York from $1.5454 yesterday, when it touched $1.5447, the weakest since June 16. The euro will fall to $1.50 by the end of September, Cole predicted, saying the region will eventually be affected by the U.S.-led slowdown.

The euro also advanced to 167.90 yen from 167.42. The U.S. currency was at 108.54 yen, little changed from yesterday. It earlier rose to a seven-week high of 108.48.

The single currency pared gains after factory orders in Germany, the region's largest economy, unexpectedly fell in June, increasing the likelihood Europe's largest economy contracted in the second quarter.

Trichet will hold a press conference after the ECB announces its decision tomorrow, at 1:45 p.m. in Frankfurt.

The inflation rate for the euro region rose to 4.1 percent in July, the fastest pace in more than 16 years, more than double the pace ECB targets.

Euro Rises, Bloomberg
8/6/2008 6:36:25 AM