LONDON, Nov 7: The dollar was steady against other leading currencies on Thursday as the markets awaited the latest batch of interest rate decisions following an unexpectedly aggressive move by the US Federal Reserve the day before.

The single European currency fell to $1.0015 having risen to $1.0032 late on Wednesday in New York.

The dollar also rose to 121.89 yen against 121.78 on Wednesday.

The dollar fell back in the immediate aftermath of the Fed’s decision to slash half a percentage point off benchmark US lending rates, which a number of analysts interpreted as a sign of increasing alarm within the central bank at the perilous position of the US economy.

But the US unit steadied as the markets focus switched to rate decisions by the European Central Bank (ECB) and Bank of England (BoE) due later.

While the majority of analysts believe the ECB is likely to peg rates at 3.25 per cent, a number said the magnitude of cut by the Fed had boosted the chances of the ECB taking the markets by surprise.

ABN Amro analyst Rob Hayward said any reduction in European rates would be welcomed by the markets and would most likely help propel the euro higher.

A failure to cut rates today is likely to see the euro giving back some of its gains, but a cut would give it a boost, Hayward said.

But CIBC World Markets economist Audrey Childe-Freman warned that the Fed’s decision could perversely make it less likely that European rates were lowered quickly.

If anything he ECB has a tendency in priding itself for moving independently from the US monetary authorities, Childe-Freman said.

Having clearly hinted that it is in no mood to cut rates just yet.. we cannot see the ECB changing its position on the back of the Fed move, she added.

Elsewhere sterling was steady ahead of the Bank of England Monetary Policy Committee (MPC)’s rate decision.

Analysts believe the British central bank is set to trim another quarter point from rates.

This aggressive Fed response will be perceived among MPC members as further evidence of a worse than expected international scene, and considering the importance attributed to international forces, this should help the rate-cut camp, Childe-Freeman said.

The euro was changing hands at $1.0015 against 1.0032 late on Wednesday in New York, 122.22 yen (121.78), 0.6401 pounds (0.6414) and 1.4650 Swiss francs (1.4630).

The dollar was being quoted at 121.89 yen (121.78) and 1.4629 Swiss francs (1.4575).

The pound was at 1.5646 dollars (1.5641), 190.70 yen (190.46) and 2.2889 Swiss francs (2.2802).

On the London Bullion Market, the price of an ounce of gold fell to $319.20 against 317.30 late on Wednesday.

—AFP