LONDON, April 18: The euro gained against the dollar on Tuesday after economic data on inflation and housing in the US dampened expectations of further rises in interest rates by the US Federal Reserve.

In late European trade, the European single currency strengthened to 1.2287 dollars from 1.2250 dollars late on Monday in New York.

The dollar fell to 117.66 yen, from 117.76 on Monday.

Later on Tuesday, the Federal Reserve was also set to release the minutes from a meeting of policymakers on March 27-28, the first meeting presided over by new chairman Ben Bernanke.

Earlier in the day, a reading of core wholesale inflation in the US had shown that the core producer price index, which excludes food and energy, had increased by 0.1 per cent in March, the smallest gain since November.

Including energy and food, wholesale prices jumped 0.5 per cent in March.

Separate data for the construction of new houses in the US showed construction at its lowest level in a year.

The data “will remove some of the Fed pressure to raise interest rates going out in the future,” said the director of currency trading at ING Capital Markets, John McCarthy. The market believes “US rates will rise more slowly or will stop rising.”

The market has been focused on differentials between interest rates in the eurozone and the US, with expectations that the US Federal Reserve will continue to raise rates offering support to the US currency.

Currency investors will scrutinize the minutes of the Federal Reserve policy meeting for any indications about the future movements of interest rates.

“The market will be interested to see whether any members expressed opinions about the likely end of the cycle,” said Steve Barrow, chief currency strategist at Bear Stearns, referring to a cycle of increases in interest rates.

The Federal Reserve has raised key short-term interest rates 15 times in a row, which fuelled a rise in the dollar last year. Financial markets expect another increase of 0.25 percentage points in May.—AFP