Euro at record low against

The European Central Bank began a policy-setting meeting in Frankfurt earlier on Thursday, with an announcement expected during the European evening. Economists polled by Reuters expect no change in interest rates from their current 3.0 per cent.

But the market still favours the dollar, as recent strong US economic indicators have fuelled speculation that the US Federal Reserve may raise interest rates from the current 4.75 per cent at its next policy-setting meeting at the end of March.

The dollar reached three-month highs against the yen in Europe8217;s early morning session and dealers saw nothing to stop its rise. With the yen saddled by negligible Japanese interest rates and the dollar boosted by the strong US economy, the Japanese currency traded at 122.84 to the dollar in Europe, its lowest level since December 1.