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NEW YORK: The US dollar shook off weak data from the manufacturing sector and held in a narrow range on Thursday as traders looked ahead to the next moves by the US and other central banks on interest rates.
The euro eased back to 1.5445 dollars at 2100 GMT after 1.5470 on
Wednesday in New York.
The dollar was meanwhile trading at 104.74 yen, down from 105.03 on Wednesday.
The dollar suffered from a report that US industrial output fell 0.7 percent in April from March, the sharpest decline since February. Soft reports from the New York and Philadelphia regional Federal Reserve banks also dampened enthusiasm for the greenback.
"A slew of US data confirmed the manufacturing-sector malaise continues. Even so, this has been largely priced in and the greenback held its ground," said Samarjit Shankar at Bank of New York Mellon.
Sue Voigtsberger at PNC Bank said the markets were now trying to assess whether the Federal Reserve was prepared to halt its cycle of rate cuts or perhaps lift rates to fight inflation, moves which could help the greenback.
"After several straight days of dollar strength, we appear to be taking a breather," she said.
"Currently the main focus on the currency markets is the interest rate gap between the US and its major trading partners. The Federal Reserve has been in an aggressive easing cycle to support liquidity concerns resulting from the mortgage crisis, but market participants believe that cycle to be at an end."
Figures released on Thursday showed that eurozone economic growth came to 0.7 percent in the first quarter from 0.4 percent in the fourth, powered by robust momentum of 1.5 percent in Germany, the fastest quarter-on-quarter rate since 1996.
With further data confirming that eurozone inflation for the year to April came to 3.3 percent, expectations grew that the European Central Bank will not cut interest rates anytime soon.
"On balance, the current data strengthens the position of the ECB hawks ... For now, the ECB looks set to be firmly on hold, at least until after the summer break and possibly much longer," said Holger Schmieding at Bank of America.
In late New York trade, the dollar stood 1.0565 Swiss francs from 1.0544 on Wednesday.
The pound was at 1.9468 dollars after 1.9457. - AFP/de
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