Dollar Flat As ECB, BoE Leave Rates Unchanged

TALI ARBEL

NEW YORK (AP) — The dollar was nearly flat Thursday after the European Central Bank and Bank of England left their respective key interest rates unchanged.

Higher interest rates can support a currency as investors transfer funds in search of better returns. The ECB and BoE maintained their rates at 1 percent and 0.5 percent, respectively, higher than the Federal Reserve's current rock-bottom range near zero.

The 16-nation euro dropped to $1.4871 from from $1.4888 late Wednesday, while the British pound slipped to $1.6572 from $1.6583. The dollar fell to 90.48 Japanese yen from 90.74 yen.

Meanwhile, rising retail sales last month and an improving picture on jobs gave the stock market a boost — but unexpectedly, didn't harm the dollar.

Over the past year, the dollar has tended to benefit from a "safe haven" play, whereupon traders buy up the dollar following worse-than-expected economic reports and corporate outlooks, or freeze-ups in credit markets.

The reverse is also true: better-than-expected news tends to hurt the greenback. That means the buck tends to trade inversely to stocks, and has tumbled since spring as the Dow Jones industrials jumped higher.