LONDON, Dec 5: The dollar was firmer against the euro on Wednesday, bolstered by strong US data as the market waited for interest rate decisions on Thursday in Britain and the eurozone, dealers said.

They said robust US factory order figures for October along with a survey pointing to an unexpectedly sharp increase in employment in November tested the view that US Federal Reserve will cut rates sharply when it meets next week.

“The unexpectedly strong employment survey, which shows a robust 189,000 increase in private payrolls in November, will raise market expectations for the official non-farm figures due on Friday,” said Paul Ashworth at Capital Economics.

They will also “deal a blow, at least temporarily,” to growing hopes that the Fed could opt for a bigger 50 basis points interest rate cut, rather than the expected 25 points, Ashworth said.

In late European trade, the euro was at $1.4665, down from $1.4739 in early deals and $1.4764 late Tuesday in New York.

Dealers said all attention was now turned to meetings of the Bank of England and the European Central Bank on Thursday.

While earlier in the week both were widely expected to hold their key interest rates at 5.75 per cent and 4.00 percent respectively, a series of poor British data prompted some speculation of a British cut in lending costs.

As a result, the pound came under pressure, especially against the dollar and euro.

“Falling house prices, declining consumer confidence and a sharp weakening in service sector activity: all the ingredients are in place for a (Bank of England) rate cut (Thursday),” said Audrey Childe-Freeman at CIBC World Markets.

Central banks around the world are trying to balance the risk of inflation, largely driven by high oil prices, against the dangers of slowing growth amid a global credit squeeze sparked by the US subprime home loan crisis.

Overnight, the Bank of Canada cut interest rates for the first time since 2004 in a surprise move, adding that it expected the US subprime woes to continue.

Meanwhile, Australia’s central bank left interest rates on hold at an 11-year high of 6.75 per cent Wednesday, while warning that it remained concerned about inflationary pressures.

In late European trade, the euro changed hands at 162.60 yen compared with 162.01 late Tuesday, at 0.7229 pounds (0.7170) and 1.6499 Swiss francs (1.6481).

The dollar stood at 110.88 yen (109.71) and at 1.1252 Swiss francs (1.1161).

The pound was at $2.0286 ($2.0587).

In London, the price of gold fell to $793 an ounce, falling back through the key $800 level and down from $797.50 late on Tuesday.—AFP