Source AP ©

Euro largely holds on to gains against U.S. dollar

The euro on Wednesday held on to most of the gains it made the previous day against the U.S. dollar as markets awaited minutes from the Federal Reserve's latest meeting on interest rates.

The 13-nation euro bought US$1.3419 in afternoon European trading, compared with US$1.3424 in New York late Tuesday. The British pound rose to US$1.9764 from US$1.9716, while the dollar rose to 119.28 Japanese yen from 119.12 yen.

The euro rose above US$1.34 on Tuesday amid worries over trade troubles between the U.S. and China - which expressed "strong dissatisfaction" over a U.S. move to file two new complaints against it at the World Trade Organization - and persistent concern over the strength of the U.S. economy.

U.S. economic data are being watched closely for hints on the Fed's future interest rates course. The bank has left rates unchanged over recent months even as the European Central Bank has increased its rates.

Minutes of the most recent U.S. Federal Open Market Committee meeting are due later Wednesday, and the dollar could weaken if the Fed signals that it may start cutting interest rates. Separately, Fed Chairman Ben Bernanke is to speak in New York.

Lower interest rates, which can be used to boost economic growth, can depress a currency by making some assets denominated in it less attractive to investors.

The ECB's governing council meets on Thursday to decide on European rates. The bank is expected to leave rates unchanged, but markets will be looking for signals as to how soon another increase might come.

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