By William L. Watts and Lisa Twaronite, MarketWatch
LONDON (MarketWatch) — The European single currency continued its rebound off two-month lows versus the dollar set earlier this week, extending a rise Tuesday as investors look to the European Central Bank to step in to address the euro-zone’s deepening sovereign-debt crisis.
The euro (EURUSD 1.3160, +0.0024, +0.1827%) temporarily topped the $1.32 level and changed hands in recent action at $1.3184, up from $1.3129 in North American trade late Wednesday.
The ECB is widely expected to leave its key lending rate at a record low 1% when it announces the result of the monthly Governing Council meeting at 1:45 Frankfurt time, or 7:45 a.m. Eastern.
The focus will instead be on ECB President Jean-Claude Trichet’s monthly post-meeting news conference at 8:30 a.m. Eastern. Read preview of ECB meeting.
To avoid disappointment, Trichet will need to at least announce the central bank will extend special liquidity measures put in place at the height of the financial crisis, analysts said. The fixed-rate loans have provided important support for euro-zone banks that have trouble securing funding on the interbank market.
Moreover, market participants are also anticipating Trichet will signal the central bank will boost its purchase of troubled euro-zone sovereign bonds in an effort to calm turmoil in credit markets.
The British pound (GBPUSD 1.5578, -0.0044, -0.2817%) traded at $1.5606 versus the dollar, little changed from $1.5612 late Wednesday.
The dollar index (DXY 80.61, -0.11, -0.13%) , a measure of the U.S. unit against a basket of major rivals, traded at 80.388, compared with 80.734 in late North American trade Wednesday.
Against the Japanese yen, the dollar (USDYEN 84.3300, +0.1200, +0.1425%) slipped slightly, buying ¥84.10, down from ¥84.16. See real-time currency quotes and tools.
