The euro reversed its gain against the dollar today after approaching
the high end of the $1.53-$1.5850 range in which it has traded in June,
according to Alan Ruskin, head of international currency strategy in
North America atRBS Greenwich Capital Markets Inc. in Greenwich, Connecticut.
``We
have reached the top of the recent range,'' said Ruskin. ``People don't
want to get carried away too much before the European Central Bank
meeting this week.''
The ECB is expected by economists
to raise its 4 percent main refinancing rate by a quarter-percentage
point on July 3, the same day a government report is forecast to show
the U.S. lost jobs in June for a sixth month.
The
inflation rate in the countries that use the euro accelerated to 4
percent, from 3.6 percent in May, the EU statistics office in
Luxembourg said. The ECB tries to keep consumer-price growth below 2
percent.
``There's a lot of trepidation about how the payrolls and the ECB
rhetoric will play out,'' said Stephen Malyon, co-head of currency
strategy at Scotia Capital Inc. in Toronto. ``The downside risk to the
U.S. economy is growing. That's something that unnerves the market.''
Futures
on the Chicago Board of Trade show a 25 percent chance that the Federal
Reserve will raise the 2 percent target rate for overnight lending
between banks by a quarter-percentage point on Aug. 5, compared with 40
percent odds a week ago.
``The sentiment is negative for growth in the U.S.,'' said Benedikt Germanier, a currency strategist at UBS
AG in Stamford, Connecticut. ``I would play the weak dollar through the
yen. The stress of the financial markets will keep the safe-haven
currencies, such as the yen and the Swiss franc, supported.''
The Chicago PMI,
a regional read on manufacturing, rose to 49.6 from 49.1 in the
previous month, versus forecasts for a dip to 48. However, any reading
below 50 indicates continued weakness in the sector.