Currencies: Investors Take Profits From Dollar's Gains Yesterday

By Dan Bernstein ,

The dollar slipped against the other major currencies this morning after posting

solid gains yesterday on a delayed rate-cut rally.

The slide was due to profit-taking on the dollar -- which had been boosted after the Fed cut the

federal funds rate by

25 basis points on Wednesday -- plus some new economic information from the eurozone.

The euro rose this morning -- lately at $0.8472, up from $0.8436 at last close -- after

European Central Bank

Vice President Christian Noyer said he expects eurozone inflation to decline this year. Inflation has been a big worry for the eurozone, ostensibly preventing the ECB from cutting interest rates. The central bank's mandate is to keep inflation under control rather than to stimulate economic growth. But recent data from Germany, Europe's largest economy, showed lower-than-expected inflation numbers for June. In May, Germany's inflation rate hit an eight-year high.

Also possibly opening the door to ECB rate cuts was a report out this morning from the

International Monetary Fund

. The IMF said the eurozone economy had weakened more than expected. The ECB lowered rates only once this year, in a surprise cut of 25 basis points, while the U.S. Fed has now lowered interest rates six times. The IMF also said that, minus any disasters, the eurozone's economy should improve over the next year.

Lately, it cost 124.28 yen to buy a dollar, a bit less than the 124.68 yen per dollar it cost at yesterday's close. Japan's currency has been weighed down by its seemingly perpetual fiscal woes. The euro also gained on the yen due to the euro's morning strength against the dollar. In recent trading, it cost 105.27 yen to buy a euro, up from last night's closing price of 105.18 yen per euro.

The British pound slipped just slightly to the dollar today, trading recently for $1.4070. The pound closed at $1.4080 yesterday.

The Canadian dollar opened higher in New York trading, as the U.S. currency slipped on profit-taking to C$1.5202, down from C$1.5219 at Thursday's close. The Australian dollar was virtually unchanged against its U.S. counterpart today, lately pricing for $0.5072, only a tad off its close yesterday of $0.5073.

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