Source AP ©

Euro costs USD1.4259 on morning tender

The euro edged slightly higher against the U.S. dollar on Thursday as a disappointing housing sales report from the U.S. weighed on the dollar.

The euro bought US$1.4259 in morning trading in Europe, slightly more than the US$1.4256 it bought in New York trading the night before, and less than a penny from the record US$1.4348 it bought early Monday.

The euro's slight gain came after the National Association of Realtors on Wednesday released a disappointing report on the U.S. housing market, saying that sales of existing homes fell by 8 percent in September and median home prices slumped.

The negative data exacerbated worries of a severe housing downturn and economic slowdown.

"Yesterday's housing data gave little reason to be upbeat about the U.S. economic outlook," said James Hughes, a market analyst at CMC Markets in London.

The British pound dipped to US$2.0488 from US$2.0490, while the dollar rose to 114.19 Japanese yen from 114.12 yen late Wednesday.

The 13-nation euro has been buoyed by expectations that the European Central Bank will raise its interest rates again, even as worries about the U.S. economy feed speculation that the Federal Reserve will soon decide on another cut in its rates.

Many currency investors have already priced in an October rate cut by the Fed.

Although lower interest rates can jump-start the economy, they can weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns. Higher rates can boost a currency.

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