The euro trimmed stronger early gains after weak US data saw investors pare back risky bets

The euro rose to a 16-month high in early trading, but pared back its gains against the dollar, to close just 0.05% higher after weak data from the US offset risk appetite.

• The dollar was under broad selling pressure in the morning after the Bank of America announced it will repay $45 billion of funds received under the Troubled Asset Relief Program.
  
• The single currency received a further boost, spiking briefly over $1.51 following the European Central Bank's announcement that it will start to unwind extreme stimulus measures that it considers are no longer appropriate now that the recession is easing.
  
• The ECB President, Jean-Claude Trichet, said that the December installment of the 12-month refinancing operation for banks would be the last.
  
• However, the euro trimmed gains as Trichet added the current interest rate remains appropriate, and he reiterated that the winding down of stimulus measures did not signal a change in rates.
  
• Later in the afternoon session, weak data from the US manufacturing sector saw the euro pull back further as concern grew over the strength of the US recovery.
  
• The data helped fuel a late sell off in US equity markets, further sapping risk demand, and supporting a slight dollar rebound.