The euro rose against the dollar for the first time in three days on
speculation European policy makers will say today they remain concerned
about inflation as a report showed German exports gained the most in
almost two years.
The currency rebounded from near an eight-week low before a European
Central Bank meeting at which President Jean-Claude Trichet may focus
on risks for consumer-price growth. Deutsche Lufthansa AG workers
received a 5.1 percent pay increase from the German airline to stay
ahead of the fastest inflation in more than 16 years. The ECB will keep
rates at 4.25 percent today.
Trichet said July 3 he had ``no bias'' or ``pre-commitment'' after
policy makers increased the main refinancing rate a quarter- percentage
point. Since then, government reports including retail sales and
consumer confidence showed economic growth is flagging.
``We think that the council is unlikely to sign up to a further policy
rate increase given the sharp deterioration in the business climate,''
a team of Barclays Capital currency strategists, led by David Woo,
wrote in an investor note today.
German sales abroad in June increased 4.2 percent from May, when they
fell 3.4 percent, the country's Federal Statistics Office in Wiesbaden
said. That's the biggest increase since September 2006. Economists
expected a gain of 1.8 percent, the median of 12 forecasts in a
Bloomberg News survey showed.
The Frankfurt-based ECB, which raised borrowing costs last month,
publishes its decision at 11:45 GMT and Trichet holds a press
conference 45 minutes later. Separately, the Bank of England kept its
key rate at 5 percent.