Euro edges higher against US dollar

The euro edged slightly higher Wednesday against the U.S. dollar, which has been under pressure from worries over the health of the American economy.

Photo: Euro edges higher against US dollar

The euro bought US$1.4178 in morning European trading, off a high for the session of US$1.4191 but still above its level of US$1.4164 in New York late Tuesday.

The British pound climbed to US$2.0351 from US$2.0315. The dollar slipped to 116.49 Japanese yen from 116.69 yen.

U.S. data on Tuesday "showed a falling appetite for U.S.-denominated investments," although that only briefly pressured the dollar, said James Hughes, a market analyst at CMC Markets.

However, he said U.S. inflation data later Wednesday could offer markets direction, and the Federal Reserve's Beige Book on economic conditions - also due later in the day - "should direct the greenback as the debate continues as to whether there are further repercussions to be expected off the back of the credit crunch."

The dollar weakened to record lows against the euro after the Fed last month lowered interest rates by a larger-than-anticipated half percentage point. Amid speculation that another cut could follow, the euro reached an all-time high of US$1.4282 on Oct. 1.

Lower interest rates, used to jump-start the economy, can weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns.