LONDON, Oct 10: The euro weakened in late trade Thursday following the European Central Bank’s decision to keep interest rates unchanged and the release of strong US labour figures, dealers said.

The single European currency fell to 0.9862 dollars from 0.9894 late on Wednesday in New York.

The dollar firmed to 123.60 yen from 123.30 on Wednesday.

“The euro was heading lower anyway after hitting 0.9925 dollars this morning. It started going down between the Bank of England and the ECB decisions (to hold their respective rates),” 4Cast currency strategist Paul Bednarczyk said.

“Now it’s very much in step with US equities which are doing quite well,” he said.

Bear Stearns economist David Brown said the ECB kept alive hopes of a rate cut to salvage the ailing euro-zone economy.

“It was no surprise that the ECB kept their powder dry this week, sticking with steady policy and a wait-and-see strategy on rates for the time being. By the time we get to next month’s meeting, it will be a different matter,” Brown said.

Commerzbank currency strategist Kamal Sharma believed that with the ECB unlikely to change policy, and such a move having already been discounted, Friday’s US retail sales and consumer confidence figures could be of more significance.

“Euro/dollar has struggled to decisively break its recent highs... but tomorrow (Friday)’s reports could be the catalyst” for such a move, Sharma said.

In Britain, the pound tracked the euro lower after the Bank of England’s monetary policy committee also left rates on hold.

But many analysts nevertheless predict that British rates are likely to be cut again later this year to shield the economy from the heavy falls on global stock markets. “If equities continue their downward trend there remains a good chance rates will come down next month,” said Philip Shaw, economist at investment bank Investec.

The focus shifted to Friday’s US retail sales, the key data release of the week, and to the University of Michigan’s preliminary release on US consumer sentiment.

The euro was changing hands at 0.9862 dollars against 0.9894 late on Wednesday in New York, 121.87 yen (122.02), 0.6308 pounds (0.6321) and 1.4633 Swiss francs (1.4637).

The dollar was being quoted at 123.60 yen (123.30) and 1.4837 Swiss francs (1.4788).

On the London Bullion Market, the price of an ounce of gold fell to $318.95 from $319.35 late on Wednesday.—AFP