NEW YORK (AP) — The dollar fell against the euro in midday trading Monday after a speech by European Central Bank President Jean–Claude Trichet indicated to investors that higher interest rates are likely.
Investors have already expected the European Central Bank will raise rates when they meet next month. However, Trichet's speech on Monday refocused the idea and helped push the euro higher against the dollar, said Camilla Sutton, chief currency strategist at Scotia Capital in Toronto.
Central banks raise interest rates to help counter inflation, and higher rates on government bonds tend to increase demand for the currency linked to that country or region.
The euro rose to $1.4107 Monday from $1.4073 late Friday.
In other trading, the dollar rose to 81.65 Japanese yen from 81.41 yen.