The US dollar rose against the euro and the yen on Thursday amid healthy demand for US Treasury bonds and speculation on rate cuts in Europe to deal with a sharp economic downturn.The euro fetched 1.3522 dollars around 1900 GMT in New York against 1.3583 at the end of trading on Wednesday.The dollar also bounced to 98.52 yen from 97.54 on Wednesday.A better-than-expected fourth quarter GDP data revision for the US economy on Thursday "did little to encourage US dollar buying as players added to short positions on improving sentiment on the back of the rally over the past two weeks in global equities," said Michael Woolfolk of Bank of New York Mellon.Revised data showed a steep 6.3 percent pace of decline in US economic output in the fourth quarter of 2008, lower than the 6.6 percent anticipated by analysts."Currency traders shrugged off the underlying weakness because the GDP report is backward looking," said Kathy Lien of Global Forex Trading."The smaller revision provides relief but investors are still cautious about believing in a recovery," she said, citing rising US unemployment.As it shrugged off the GDP revision, the foreign exchange market closely monitored the bond market, where the Treasury's offering for seven-year notes enjoyed good demand compared with a weak auction a day earlier for five-year notes.Investors were "relieved to see healthy demand for today's Treasury auction, where the government successfully sold a record 24 billion dollars in seven-year notes," said Elizabeth Harrow at Schaeffer's Investment Research.The dollar also rose on continued bearish outlook for the euro zone.A pick-up in German consumer confidence has stalled as Europe's biggest economy has been hit by a steady stream of bad news, the latest survey by the GfK research institute showed on Thursday.A key index compiled by GfK edged lower to 2.4 points for April from a revised 2.5 points this month, the Nuremberg-based think tank said."As Europe's largest economy heads into a deepening recession, the European Central Bank is expected to ease policy further as the outlook for growth and inflation falters," said David Song of Forex Capital Markets.The euro was hit by expectations that the European Central Bank will lower interest rates next week and might announce new measures to breathe life into the contracting European economy."Two influential governing council members... have given clear signals that the ECB is set to ease monetary policy significantly next Thursday," said analysts at Barclays Capital.They said new measures could be unveiled including extending the term of the longer-term refinancing operations and also buying corporate debt.ECB vice president Lucas Papademos suggested on Thursday the European Central Bank could follow its peers in buying corporate bonds to ease credit market tensions.The European Central Bank has so far been reluctant to follow the example of its major counterparts in Japan, the US and Britain, which have programmes to buy corporate bonds aimed at bringing down market interest rates.The US dollar was lower at 1.1268 Swiss francs in New York on Thursday from 1.1318 a day earlier.The British pound fell to 1.4446 dollars from 1.4669. - AFP/de
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