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 will keep its key interest rate at 4.25 percent, according to a Bloomberg
News survey of economists. 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.
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 paceECB targets.
The
U.S. dollar held near seven-week highs against the yen as oil tumbled
to the lowest level in three months, supporting economic growth
prospects in the world's largest consumer of the fuel.
Oil
has lost more than $28 since touching a record of $147.27 a barrel in
New York on July 11 as unprecedented fuel costs prompted U.S. consumers
to limit spending.
``The U.S. dollar should continue to
be buoyed,'' said Tsutomu Soma, a bond and currency dealer in Tokyo at
Okasan Securities Co. ``The fall in oil is a plus for the U.S. At the
same time, it encourages the withdrawal of funds from the commodity
currencies.''
EUR/USD rise to $1.5515 from session low at $1.5448.