The euro was marginally lower against the dollar on Friday, a U.S. holiday, as markets mulled less-than-hawkish comments from the European Central Bank on its future interest rate course, according to AP. The 15-nation euro bought US$1.5690 in European afternoon trading, down only slightly from its level of US$1.5699 in New York late Thursday. The European Central Bank raised its benchmark interest rate by a quarter percentage point to 4.25 percent on Thursday to combat rising inflation in the euro zone. Still, the ECB's comments on its decision and outlook indicated that the increase was not part of a series. Many observers had expected an indication on future upward rate moves, and a more assertive stance from the bank would likely have sent the euro higher. Higher interest rates can slow inflation and at the same time underpin a currency as investors park money where it can earn more interest. However, they can also slow growth as money becomes more expensive to borrow. «Yesterday the ECB delivered its inevitable rate hike, but in the press conference, (ECB President Jean-Claude Trichet's) tone was less hawkish than expected,» Shandi Modi, a currency analyst at IDEAglobal in New York, wrote in a research note.
