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FX round-up: Dollar regains lost ground

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Date: Tuesday 01 Jul 2008

LONDON (ShareCast) - The dollar regained some lost ground Monday, as the second quarter came to a close, although the dollar is expected to come under pressure later this week on expectations that the European Central Bank will increase interest rates.

The euro has gained in recent weeks on speculation that the ECB will increase rates to 4.25% to help rein in inflation.

Recent data for the euro zone showed higher than expected consumer prices in June, boosting expectations for a rate hike.

Meanwhile in the US, the dollar hardly reacted to a report that showed better than expected business activity in the Mid West last month.

Instead traders will be closely watching a key jobs report out this Thursday. US markets will be closed Friday for a public holiday.

Sterling rose to a 2-month high against the dollar Monday before settling almost unchanged against the currency as traders closed positions at the end of the second quarter.

Sterling was unmoved by data showing a heavy decline in UK mortgage approvals.

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