Euro slips back under 1.49 U.S. dollars

Against the Japanese currency, the dollar fell to 88.98 yen from 89.34 yen late on Wednesday.

The euro was lower as “risk appetite is failing to show much improvement this week and sharply weaker-than-forecast U.S. housing data dampened sentiment,” said Calyon analyst Mitul Kotecha.

But players think the euro's broader uptrend is intact, and reports on U.S. factory output and joblessness due later Thursday are “unlikely to lead to a reversal in sentiment as concerns about the pace of growth intensify,” Kotecha added. In London on Thursday, the euro was changing hands at 1.4871 dollars against 1.4961 dollars late on Wednesday, at 132.33 yen (133.68), 0.8909 pounds (0.8934) and 1.5138 Swiss francs (1.5109).

The dollar stood at 88.98 yen (89.34) and 1.0179 Swiss francs (1.0096).

The pound was at 1.6692 dollars (1.6741).

On the London Bullion Market, the price of gold fell to 1,136.13 dollars an ounce from 1,149 dollars an ounce late on Wednesday.

The dollar rose in regional Asian trade. It firmed to 1.3877 Singapore dollars from 1.3858, to 32.19 Taiwan dollars from 32.14 and to 46.90 Philippine pesos from 46.74. The greenback rose to 9,510 Indonesian rupiah from 9,425, to 33.20 Thai baht from 33.19 and to 1,157.15 South Korean won from 1,153.45.

Demand for high-yielding currencies such as the euro — seen as more vulnerable to weakness in the global economy — declined after the release of lackluster U.S. data on inflation and housing starts.

But the greenback's gains were capped by speculation that the U.S. Federal Reserve will keep its interest rates low for some time, reducing the appeal of dollar-denominated assets, dealers said.

“A sub-par recovery and benign inflation outlook are the two main reasons why we believe the Fed will not hike rates for a long while yet,” said Kotecha.

A report Wednesday showed U.S. consumer prices rose by a higher-than-expected 0.3 percent in October, mainly due to higher gasoline prices, but markets remained more concerned about the risk of deflation, dealers said.

Meanwhile traders digested the latest global economic outlook from the Organization for Economic Cooperation and Development (OECD).

The 16-nation eurozone has snapped out of recession sooner than expected but recovery will be slow, with annualized growth of 0.6 percent in the fourth quarter, according to the OECD.

The Paris-based grouping of 30 of the world's richest nations also urged governments to start withdrawing stimulus measures from late 2010.

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