LONDON, 3 February 2005 — The dollar, after trailing the euro for much of the day yesterday, later staged a modest rally ahead of what is widely expected to be an announcement by the US Federal Reserve of another interest rate hike. The single European currency in late day trade was at 1.3018 dollars against 1.3042 late Tuesday in New York. The euro at one point rose to 1.3094 before turning weaker as the Fed announcement — scheduled for 1915 GMT — drew closer. The dollar was, meanwhile, trading at 104.05 yen after 103.66 on Tuesday.

The euro was changing hands at 1.3018 dollars against 1.3042 late on Tuesday in New York, 135.40 yen (135.17), 0.6908 pounds (0.6922) and 1.5552 Swiss francs (1.5534). The dollar stood at 103.05 yen (103.66) and 1.1956 Swiss francs (1.1915). The pound was at 1.8833 dollars (1.8826), 195.96 yen (195.17) and 2.2512 Swiss francs (2.2431).

US stocks edged higher as traders awaited an expected move by the Federal Reserve and mulled a raft of strong earnings reports led by Google and Boeing. The Dow Jones Industrial Average climbed 36.50 points (0.35 percent) to 10,588.44 while the technology-heavy NASDAQ index rose 3.78 points (0.18 percent) to 2,072.48 at 1645 GMT. The Standard and Poor’s 500 broad-market index edged up 2.90 points (0.24 percent) to 1,192.31.

Asian stocks closed mostly firmer yesterday, with the significant exception of Hong Kong, as markets welcomed continued gains on Wall Street after solid US corporate results, dealers said.

At the same time, trade was relatively restrained ahead of an expected 0.25 percentage point hike in US interest rates as investors wait to see the fine print of the Federal Reserve statement for assurance it will continue its “measured pace” of increases.

Japanese share prices closed 0.20 percent higher, supported by continued gains on Wall Street but trade was cautious ahead of an expected hike in US interest rates later in the day, dealers said. The Tokyo Stock Exchange’s benchmark Nikkei-225 index rose 22.74 points to 11,407.14. The broader TOPIX index of all First Section shares gained 5.48 points or 0.48 percent to 1,151.97.

South Korean share prices closed 0.24 percent lower, with investors on the sidelines ahead of the US Federal Reserve’s expected hike in interest rates later in the day and the Group of Seven meeting, dealers said.