Euro gains ground on dollar on US interest rate uncertainty

LONDON (AFP) - The euro gained more ground on the dollar on market uncertainty over the future trend to US interest rates.
The single European currency in late-day trade was at 1.2514 dollars against 1.2490 late in the day in New York on Monday.
The dollar meanwhile was trading at 108.39 yen down from 109.24 on Monday.
Dealers said that while the US currency remained squeezed by the euro, stronger than expected core US inflation figures -- which exclude food and energy -- helped ease selling pressure.
The dollar has been weakened by concerns over softer activity data, a widening trade deficit, weak equity portfolio flows and outflows of foreign direct investment.
But the stronger than anticipated inflation numbers on Tuesday suggested that the US central bank, the Federal Reserve, has enough justification for approving an interest rate hike at its next meeting November 10.
Tuesday's figures from the government showed that while overall US inflation rose a modest 0.2 percent in September, the seasonally adjusted core consumer price index was up 0.3 percent, the sharpest rise since April.
The former was in line with predictions but the latter was ahead of market forecasts.
"For markets, the rise in core inflation is a reminder that further monetary tightening will be required at some stage, and that should provide some temporary support to the dollar," said Daragh Maher a CALYON.
Elsewhere, the Canadian central bank raised interest rates by a quarter point to 2.50 percent as expected, keeping the Canadian dollar little changed.
The Bank of Canada adopted a slightly doveish tone, signalling that high oil prices will hurt the overall economy.
"This shift in language had been anticipated by the market, reflected in Canadian dollar weakness in the run-up to the announcement," said Maher.
Separately, comments from US Federal Reserve Chairman Alan Greenspan that US household finances appear to be in reasonably good shape passed by without a ripple in the currency market.
The pound stabilized after falling in response to continued weakness in British economic numbers.
Some sections of the market believe the Bank of England may have gone too far in hiking interest rates and may have to therefore lower rates sometime next year.
The yen found some support from lower oil prices, the steep rise on the Nikkei index and the dollar's general weakness to hit a three-month high against the US currency.
The euro was changing hands at 1.2514 dollars from 1.2490 late on Monday in New York, 135.65 yen (136.48), 0.6940 pounds (0.6947) and 1.5393 Swiss francs (1.5381).
The dollar stood at 108.39 yen (109.24) and 1.2300 Swiss francs (1.2315).
The pound was at 1.8037 dollars (1.7978), 196.39 yen (196.39) and 2.2182 Swiss francs (2.2141).
On the London Bullion Market, the price of an ounce of gold stood at 419.35 dollars against 418.83 on Monday afternoon.