LONDON, June 17: The euro gained a small amount of ground against the dollar on Tuesday in cautious trading before the release of further key US economic data later in the day.

The single European currency stood at $1.1851 from 1.1823 late on Monday in New York.

The dollar was at 117.67 yen from 117.69 on Monday.

The previous day, the euro had edged to within a fraction of its all-time high of $1.1933, hitting 1.1930 in early European trading.

However the US currency regained some ground after the Federal Reserve’s Empire State survey of manufacturing activity in New York, seen as a key national indicator, showed unexpected strength.

The turning point at 1.1930 was significant in that it was just below the all-time high and is likely to weigh on the euro in the near term, said Bank of Tokyo-Mitsubishi analyst Derek Halpenny.

Later Tuesday, fresh US data including inflation figures for May were due to be closely examined for clues as to a likely interest rate cut next week.

On June 25, the Federal Reserve’s Open Market Committee (FOMC) meets to ponder what analysts expect to be either a 25 or 50 basis point rate reduction, a move which could send the dollar tumbling further.

If Tuesday’s statistics show up any indication of deflation taking a hold of the US economy, at would add weight to the arguments for a more substantial rate cut.

Inflation data over the past few years has not been a significant driver of currencies, but today’s numbers could be the most important of the week for the greenback, he said.

In the past half year, we have reduced interest rates by 125 basis points and we now have the lowest interest rates since 50 years, said Welteke, who also sits on the policy-setting governing council of the European Central Bank.

Monetary policy is not an issue that should be addressed in this situation, he said in an interview on Deutsche Welle Television.

The euro was changing hands at $1.1851 from 1.1823 late on Monday in New York, 139.51 yen (139.09), 0.7043 pounds (0.7050) and 1.5414 Swiss francs (1.5422).

The dollar was being quoted at 117.67 yen (117.69) and 1.3008 Swiss francs (1.3044).

The pound was at 1.6829 dollars (1.6766), 198.07 yen (197.32) and 2.1892 Swiss francs (2.1870).

On the London Bullion Market, the price of an ounce of gold stood at $360.75 from 358.30 on Monday afternoon. —AFP