Euro starts week up against U.S. dollar

The 13-nation euro started the week up slightly on the U.S. dollar Monday as currency markets speculated about the direction of American interest rates.

Photo: Euro starts week up against U.S. dollar

In morning European trading, the euro bought US$1.2916, compared with US$1.2910 late Friday in New York.

The British pound fell to US$1.9570 from US$1.9588, while the dollar rose to 121.89 Japanese yen from 121.58 yen.

The U.S. Federal Reserve meets on Tuesday and Wednesday to decide on interest rates.

Higher interest rates support a currency by making some assets denominated in that currency more attractive to investors. Analysts speculated the Fed would keep rates unchanged again.

The central bank has kept rates unchanged at 5.25 percent for the past four meetings after a string of hikes that lifted the dollar, reports AP.

"There's certainly been an upturn in the U.S. economic data we've seen released over the last few weeks although the residential property market continues to struggle and, as such, there's mounting speculation that the Fed will not now be looking to cut interest rates in the near term," said David Jones, chief market analyst at CMC markets.

He added, however, that currency markets may have already priced the decision in.