LONDN, Oct 24: The dollar edged higher on Thursday amid speculation the US Federal Reserve could be poised to cut interest rates, possibly as early as next month, to bolster the ailing US economy.

The single European currency edged lower to $0.9735 from $0.9763 late on Wednesday in New York.

The dollar fell to 124.42 yen from 124.58 on Wednesday.

Analysts said the dollar continued to be buoyed by the recent revival in Wall Street’s fortunes, along with mounting hopes that the US central bank would cut interest rates to bolster growth when it meets on November 6.

There were suggestions in the market that the Federal Reserve’s Beige Book report, released late Wednesday, could have paved the way for an early reduction in US lending rates.

The book revealed that most of the 12 Fed district banks reported that economic activity remained sluggish through mid-October.

There is talk in Washington of a Fed rate cut by year-end, said ABN Amro currency strategist Aziz McMahon.

He said that the report had painted a softer picture of the economy than the previous month’s report and as such “will not allay ‘double-dip’ (recession) worries.

But data released earlier suggested the US economy may be in better shape than some doom-mongers have suggested.

Initial claims for regular state unemployment benefits fell 25,000 to a seasonally adjusted 389,000 for the week ended October 19 from the previous week, the Labor Department said.

Elsewhere the Japanese yen remained under pressure after Japanese opposition parties lodged a no-confidence motion against Economic and Fiscal Policy minister, Heizo Takenaka earlier Thursday.

She said the yen would weaken in the short term if Takenaka manages to implement a hard-hitting plan to revitalise the banking sector.

But she added that while the dollar/yen rate could spike above 125 in the short-term, in the long-term there will be a gradual improvement in Japan (and in the currency).

The euro was changing hands at 0.9735 dollars against 0.9763 late on Wednesday in New York, 121.09 yen (121.63), 0.6295 pounds (0.6301) and 1.4685 Swiss francs (1.4681).

The dollar was being quoted at 124.42 yen (124.58) and 1.5077 Swiss francs (1.5029).

The pound was at 1.5464 dollars (1.5486), 192.42 yen (192.96) and 2.3318 Swiss francs (2.3283).

On the London Bullion Market, the price of an ounce of gold stood at $311.60 against 312.10 late on Wednesday. —AFP