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Dollar edges up against the euro in early Wednesday trading

Dollar edges up against the euro in early Wednesday trading

The dollar on Wednesday edged slightly higher against the euro, which had started 2007 up against the U.S. currency in thin trading.
The 13-nation European currency bought US$1.3274, a very slight dip from US$1.3276 in late trading in New York on Tuesday.
The British pound also lost a little ground to the dollar, trading at US$1.9714, down from US$1.9729 overnight. The dollar gained on the Japanese currency to 118.94 yen from 118.85 yen late Tuesday.
Traders warned the euro's rally in late 2006 would likely start taking its toll on manufacturing activity, and so reduce the need for continued rate hikes by the European Central Bank.
"Euro strength is unlikely to extend far into 2007," Stephen Lewis, chief economist with Insinger de Beaufort in London, told Dow Jones Newswires.
Higher interest rates, a weapon against inflation, support a currency by making some assets denominated in that currency more attractive to investors.
The strong euro could also raise concerns over the growth of exports _ a key economy motor for Germany, Europe's largest economy.