Interest rate speculation boosts euro

The euro was stronger in relation to the US dollar and the pound Thursday as Tropical Storm Gustav regained force, sending oil prices higher and contributing to speculation that the price gains will kick inflation higher and force the European Central Bank to raise interest rates next year.

In morning trade in New York, it took $1.4723 to buy a euro, while the euro was worth 80.49p and ¥161.1063.

The South African rand, however, strengthened against the greenback and the euro on gains in gold and platinum prices and despite gains in both producer price inflation and consumer inflation there.

At mid-morning in New York, the rand traded at $7.7085 to the dollar and at R11.352 to the euro.

The Australian and New Zealand dollars both were stronger on the session, with gains for the Aussie coming bigger gains than expected in business investment in the second quarter.

Investors still expect the Reserve Bank of Australia to cut interest rates next year, but the cuts are not expected to be as big as originally anticipated.

The Aussie was worth 86.44 cents US and ¥94.5924 in mid-morning trade in New York, while at the same time it took 70.22 cents US or ¥76.84 to buy a New Zealand dollar.

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