The euro climbed yesterday, boosted by figures showing inflation slowing in some German states which offset the effect of gloomy French economic data.
The single European currency was quoted at $0.8758 from $0.8701 overnight in New York. The euro held in its recent tight range close to 87 US cents, as a mixed bag of indicators came in from France, Germany and Spain.
A 0.1-per cent contraction in the French economy in the fourth quarter did little for sentiment, but weak price inflation data in Germany and Spain left some cause for cheer.
"There was good news from Spain and Germany but bad news from France," noted Mr Julian Jessop, a currency specialist with Standard Chartered bank. "In a sense it shows that the recovery in the euro zone is not real yet but in another this will leave room for the European Central Bank to cut its rate" he said. "We think that the ECB will cut its rates by the end of the first half of 2002." With a lack of US economic news flow, investors eyed the US stock markets for a lead. But an uninspiring opening on Wall Street endeared the dollar to few investors.