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Dollar Up Slightly Ahead Of ECB Decision


The dollar is up slightly against its major European competitors on Wednesday and is also gaining ground against the Japanese Yen. Investors are awaiting Thursday's interest rate decision from the European Central Bank. No change in the interest rate is expected to be announced tomorrow, but some weak data from Germany has fueled speculation for a surprise rate cut.

The dollar climbed to a 2-day high of $1.3036 against the Euro, but has since eased back to around $1.3065.

Germany's industrial production rose 0.2 percent in November from a month ago, the Federal Ministry of Economics and Technology showed Wednesday. Although it reversed a 2 percent fall logged in October, the growth rate was weaker than the 1 percent rise forecast by economists.

Policymakers of the Bank of England are set to adopt a "wait and see" stance at the start of the year as policymakers see little compelling case for another stimulus.

The Monetary Policy Committee headed by Mervyn King is expected to keep the size of its bond buying program unchanged at GBP 375 billion and the interest rates unchanged at record low 0.50 percent on Thursday. The announcement is due at 7.00 am ET.

The greenback rose to $1.5992 against the pound sterling Wednesday, its highest level since the end of November, but has since slipped back to around $1.6025.

The U.K. visible trade deficit narrowed to GBP 9.2 billion in November from GBP 9.5 billion in October, the Office for National Statistics reported Wednesday. The deficit was seen at GBP 9 billion.

British shop price inflation remained at 1.5 percent for a third consecutive month in December, but food inflation eased noticeably, a report from the British Retail Consortium (BRC) showed Wednesday. Economists expected the shop price index to rise 1.7 percent year-on-year. Food inflation fell to 4.1 percent in December from 4.6 percent in November.

The buck has rebounded from yesterday's 3-session low of Y86.813 against the Japanese Yen on Wednesday, to a 2-day high of Y88.005.

by RTTNews Staff Writer

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