Euro moves up in London

The euro inched up on Thursday after the European Central Bank left interest rates unchanged as expected, as investors looked to the upcoming news conference for clues on the future path of monetary policy.
Markets are pricing in a quarter point eurozone rate rise in December, to 3.5 percent, but the outlook for 2007 is less clear-cut, analysts said. ECB President Jean-Claude Trichet holds a news conference at 1330 GMT.
"The market knows exactly what the near-term agenda is for the ECB - all we're waiting for now is confirmation that the ECB has switched from close monitoring to vigilant policy language, that will confirm that a December rate hike is on the agenda," said Audrey Childe-Freeman, European economist at CIBC World Markets.
The euro ticked up to the day's highs at $1.2776 at 1250 GMT, up slightly on the day and within a quarter cent of one-month highs set on Wednesday.
The euro was already on a firm footing on Thursday after the eurozone Purchasing Managers' Index edged up to 57.0 in October, higher than the 56.7 consensus forecast.
Also on Thursday, data showed German unemployment fell by a larger than expected 67,000 in October, on a seasonally adjusted basis. The yen firmed half a yen against the dollar and euro in European trade after Japan's top financial diplomat, Hiroshi Watanabe, said there was no reason for the Japanese currency to weaken, given that the economy was recovering. The Japanese currency later gave up most of those gains.
"The market is very sensitive about anything that comes along that affects the weak yen scenario, for the simple reason that the market is very heavily leveraged in short yen positions," said Neil Mellor, currency strategist at Bank of New York.
The dollar fell as far as 116.68 yen, close to five-week lows of 116.55 set on Wednesday, but recovered to 116.98, steady from the US close.
The euro fell to 148.86 yen, before recovering to 149.40, steady from late New York. The Canadian dollar hit two-month lows against the yen. Markets are closed for a holiday in Japan on Friday.