Date: Thursday 07 Jun 2012
The euro made headway against the dollar on Wednesday, in volatile trading, on hopes that leaders will take decisive action to tackle the Eurozone debt crisis.
The European Central Bank kept interest rates at 1% and the outlook for economic growth unchanged at their meeting.
Hopes for further stimulus were sparked by comments from European Central Bank President Mario Draghi who said: "We stand ready to act”. He also said some members had wanted to lower rates.
The euro traded at $1.2561 compared to $1.2447 the previous session after reaching an intra-day high of $1.2528.
The dollar index, which measures the US currency against a basket of six other major currencies, declined to 82.263 from 82.801 on Tuesday.
Also on Wednesday, president of the Atlanta Federal Reserve Bank, Dennis Lockhart, said the US central bank may need to consider additional monetary easing.
Markets will be keen to hear what US Federal Reserve chairman Ben Bernanke says when he testifies to Congress on the economy on Thursday. Traders will be looking for any hints of quantitative easing.
Meanwhile the latest Beige Book showed the US economy grew at a "moderate pace" during April and May, slightly better than previous reports however concern about the stability of the US recovery remains.
Against the yen, the dollar rose 0.6% to ¥79.24 while the euro added 1.6% to ¥99.5.
Sterling rose against the broadly pressured dollar on Wednesday as speculation about US monetary easing increases. Sterling pulled off a five month low to climb 0.6% to $1.5471.
Focus is expected to turn to Thursday's Bank of England rate decision and the likelihood of more stimulus following last week's gloomy manufacturing figures.
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