LONDON (AFP) - The dollar rose against the euro and yen on Thursday amid reduced risk aversion and speculation that US interest rates will remain low for some time, dealers said.
The British pound was lower against its main rivals with the Bank of England widely expected to keep its key lending rate at a record-low 0.5 percent.
In late morning trade here, the European single currency dipped to 1.4560 dollars from 1.4564 dollars in New York late on Wednesday.
Against the Japanese currency, the dollar rose to 92.15 yen from 92.00 yen on Wednesday.
The dollar is close to its lowest level of 2009 against the euro, hit by mounting expectations that the US Federal Reserve will refrain from raising interest rates for some time to avoid nipping a recovery in the bud.
Investors generally favour currencies offering higher returns.
Federal Reserve Bank of Chicago President Charles Evans on Wednesday signalled that it was too early for the central bank to tighten credit as labour conditions remained strained.
"If interest rates are going to remain low for a while, it means that the economy still needs time to recover," said Hideaki Inoue, chief foreign exchange strategist at Mitsubishi UFJ Trust and Banking Corp.
"Investors, cautious about the US economy, are turning to gold as a safe haven," he added.
Gold prices have soared to 18-month highs above 1,000 dollars an ounce in recent days.
The Fed has maintained its funds rate at a historic range of zero to 0.25 percent since last December -- the height of the financial crisis and market meltdown.
While US manufacturing activity and house prices have picked up in recent months, credit conditions remain tight. Also, unemployment remains close to 10 percent, depressing spending which is a key driver of US growth.
The weak prospects have prompted investors to snap up higher-yielding assets elsewhere, such as the currencies of commodity exporters Australia, New Zealand and Canada, which have benefited from rises in raw materials prices.
Australian interest rates stand at 3.0 percent with some analysts expecting a hike in October.
Traders were waiting for a monetary policy decision by the Bank of England later in the day, with policymakers tipped to keep lending rates on hold and refrain from signalling an end to emergency stimulus measures.
The Bank of Canada is also expected to leave its key lending rate on hold at 0.25 percent, with investors looking for any signs the economy is on a rebound.
In London on Thursday, the euro was changing hands at 1.4560 dollars against 1.4564 dollars late on Wednesday, at 134.10 yen (134.03), 0.8812 pounds (0.8802) and 1.5152 Swiss francs (1.5156).
The dollar stood at 92.15 yen (92.00) and 1.0412 Swiss francs (1.0404).
The pound was at 1.6516 dollars (1.6544).
On the London Bullion Market, the price of gold fell to 992.65 dollars an ounce from 999.50 dollars an ounce late on Wednesday.
47.44 (0.41%)
