May 03, 2007	Thursday	Rabi-us-Sani 15, 1428

LONDON, May 2: The dollar rose against the euro on Wednesday after a survey on the US manufacturing sector revealed unexpected strength, reducing the chances of an interest rate cut by the Federal Reserve, analysts say.

The euro was changing hands at $1.3598, against 1.3606 late on Tuesday. The dollar was changing hands at 120.06 yen, after earlier striking a two-month peak of 120.28 yen.

The European single currency has edged down from its all time high of $1.3682, which was struck last Friday. During trading on Wednesday it dropped to its week-low of $1.3561, before recovering as operators avoided risk-taking ahead of key US employment data on Friday.

“The dollar has recovered notably against the euro and briefly broke above the 120 level against the yen in response to the surprisingly strong ISM manufacturing report for April,” said Derek Halpenny, senior currency economist at The Bank of Tokyo-Mitsubishi.

He added: “However, market participants are probably not yet convinced by the ISM report and the euro is likely to hold in close to current levels at least until the employment report on Friday.” The Institute of Supply Management's index of US industrial activity rose to 54.7 from 50.9 in March, beating market expectations for a slight gain to 51.

According to analysts, the data made it more likely that the US Federal Reserve would maintain interest rates at the current level of 5.25pc when it meets on May 9.

The euro changed hands at $1.3598, against $1.3606 late Tuesday, 163.28 yen (162.99), 0.6830 pounds (0.6805) and 1.6505 Swiss francs (1.6517).The dollar stood at 120.06 yen (119.78) and 1.2140 Swiss francs (1.2143).

The pound was being traded at $1.9909 (1.9985).—AFP