Euro rises against dollar to $1.4429

FRANKFURT — The euro was higher against the dollar Thursday as markets anticipated that any turnaround in the U.S. economy could still be a long way off.

The 15-nation euro bought $1.4429 in European morning trading, up from the $1.4349 late Wednesday in New York. The euro peaked at $1.4437 Wednesday, its highest point since September.

On Tuesday, the Federal Reserve slashed its federal funds rate target to between zero and 0.25 percent, down from 1 percent, a level that was already the lowest rate target in a half-century, and said it would take unprecedented moves in an effort to battle the financial crisis.

The Fed has now committed to increasing the money supply by expanding lending and injecting liquidity in efforts to make more credit available to consumers and businesses.

Meanwhile, the European Central Bank has given no indication of a further rate cut in January from its current 2.5 percent, despite some analysts' anticipation of such a move.

Lower interest rates can drive investors from a currency as they seek higher returns elsewhere.

"With the Fed funds rate now at 0.25 percent and expected to remain low for the year, the euro versus the dollar will start 2009 on a strong footing," UniCredit wrote in a research note.

In other currencies the British pound fell to $1.5427 Thursday from $1.5476, while the dollar bought 87.85 Japanese yen, from 87.96 late Wednesday in New York.

The dollar traded as low as 87.11 yen Wednesday, its weakest level since July 1995.

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