Dollar inches nearer euro trough

The dollar slipped towards a four-month low against the yen and inched nearer a 20-month trough versus the euro today on expectations that the US currency's interest rate advantage is set to erode further.

Surprisingly strong US service sector data released in the previous session had helped to put the brakes on a sharp two-week-long sell-off in the dollar.

But amid expectations for rates to climb in the euro zone this week and for the Federal Reserve to trim rates next year, the dollar extended losses of around 3 per cent built up against the euro and the yen since late November.

By 0620 GMT, the dollar slipped around 0.2 per cent to 114.60 yen closing in on the four-month low of 114.43 yen struck on electronic trading platform EBS in the previous session.

The euro fell to 152.75 yen well off a record high of 154.18 yen hit earlier in the week.

The euro rose to $1.3335 from around $1.3315 in late US trade, in sight of a 20-month high of $1.3370 hit on Monday.

The euro was up from a low of $1.3287 touched yesterday after the US Institute for Supply Management's services index rose to 58.9 in November from 57.1 in October, surpassing forecasts for a slide to 56.0.