June 28, 2008	Saturday	Jamadi-us-Sani 23, 1429

LONDON, June 27: The dollar was slightly firmer against the euro on Friday on a rebound in US consumer spending as traders awaited an expected hike by the European Central Bank next week in eurzone interest rates.

The single European currency in late-day trade was at $1.5748, down from $1.5756 on Thursday.

The dollar was meanwhile at 106.35 yen after 106.73 on Thursday.

US consumer spending rose 0.8 per cent in May while incomes swelled 1.9 per cent, a government report showed Friday.

The monthly Commerce Department snapshot is followed closely by the financial markets because consumer spending is the main driver of US economic activity, which has been sapped by a lengthy housing downturn and a credit squeeze.

The pickup in spending suggested that the US Federal Reserve, which this week left its key interest rate unchanged, could be inclined to tighten monetary policy in the near future, a move that would support the dollar.

Market players were meanwhile gearing up for an expected decision by the ECB on Thursday to raise its benchmark interest rate by a quarter of a point to 4.25 per cent to avert a spurt in inflation. With the Fed rate currently stuck at 2.00 per cent, tightening action by ECB would make the euro even more attractive to investors.

“If the market is coming to the view by then that the Fed’s strong language against inflation may not be backed by actions, we think that the euro-dollar rate would likely move up to 1.60.”Pressure on ECB policymakers to contain rising prices is likely to intensify following a report Friday that German inflation picked up speed in June, jumping to an annual 3.3 per cent, the fastest pace since 1993, from 3.0 per cent in May.

In London trading on Friday, the euro changed hands at $1.5748 against $1.5756 late on Thursday, at 167.46 yen (168.18), 0.7899 pounds (0.7923) and 1.6082 Swiss francs (1.6131).

The dollar stood at 106.35 yen (106.73) and 1.0211 Swiss francs (1.0236). The pound was at $1.9938 ($1.9883).

On the London Bullion Market, the price of gold advanced to $919.50 per ounce at the fixing from $909.50 late on Thursday.—AFP