Euro up against dollar as rates seen staying low

Euro briefly hits $1.5011 in European afternoon trade after G-20 stimulus pledge

• By George Frey, AP Business Writer
• On 7:01 am EST, Monday November 9, 2009

FRANKFURT (AP) -- The euro moved as high as $1.5011 in European trading Monday after the world's leading economies agreed to keep stimulus measures intact for the time being and as weak U.S. unemployment data suggested interest rates will not be hiked in coming months.

The 16-nation euro briefly touched $1.5011 in European afternoon trading before settling back to $1.4985, up from the $1.4835 late Friday in New York.

The British pound also rose to $1.6808 compared with $1.6602, while the dollar fell to 89.88 Japanese yen from 89.93 yen late Friday in New York.

The euro's 14-month high of $1.5061 was set October 26.

Over the weekend, finance ministers of the Group of 20 leading industrialized and developing economies said they would not yet withdraw economic stimulus measures until they saw proof of sustainable recovery. Some countries, such as the U.S., Japan and Germany, would like to start discussing strategies to unwind the measures, but they agreed to keep them in place for the time being.

That pushed investors to sell the dollar, which is typically bought as a safe haven.

Furthermore, the U.S. government on Friday said the jobless rate rose to 10.2 percent last month from 9.8 percent in September, the highest level since April 1983.

Investors regarded that as another signal that the U.S. central bank won't raise its interest rates from its low near zero percent for some time.

Higher interest rates can support a currency as investors transfer funds in search of better returns.

On Thursday, the European Central Bank and Bank of England held their interest rates steady at 1 percent and 0.5 percent, respectively.

"Early indications suggest further dollar declines, as the euro broke above last week's highs at $1.4910 and $1.4920 and now looks set to retest the highs of last month at $1.5065 and $1.5070," CMC Markets analyst Michael Hewson said in a Monday research note.

"The euro should now find support around the $1.4815 and the $1.4825 area," he said.

Buzz up!