Euro, Pound Drift Lower Against Dollar

The euro, which expanded to include Malta and Cyprus on Jan. 1 bringing the number of countries using it to 15, bought $1.4695 in midmorning European trading, slightly below the $1.4726 it bought in New York late Wednesday.

Germany's jobless rate remained unchanged at 8.1 percent in December, as the number of people without work in Europe's biggest economy edged up to just over 3.4 million, government figures showed. The Federal Labor Agency said that the total number of unemployed in Germany increased by 28,000 from November to 3.406 million.

The dollar also moved higher after the Tempe, Ariz.-based Institute for Supply Management, a private research group, said Wednesday that its manufacturing index registered 47.7 last month, down 3.1 percentage points from the 50.8 recorded in November.

The dollar has been buffeted by worries over the health of the U.S. economy and three interest rate cuts by the U.S. Federal Reserve, which is trying to reduce borrowing costs to revive the nation's battered housing market. Investors think another rate cut may be on the way and could glean hints about such a move when the Fed releases the minutes from its last meeting.

Some analysts are not convinced of the need to continue cutting rates, however.

"In the grand scheme of things we still beg to differ over the need for ongoing monetary stimulus," said Andrew Wilkinson of Interactive Brokers Group LLC in an e-mail. "The housing meltdown indeed needs to work its way through the bowels of the economy and we're not at all convinced that by reducing interest rates, the Fed will initiate greater lending appetite by the nation's banking system."

Lower interest rates can jump-start a country's economy, but may weigh on the currency as traders look to invest in higher-yielding assets.