The European single currency climbed against the dollar on Tuesday, closing in on an all-time high against the US currency. In early European trade, the single currency rose to 1.3660 dollars, from 1.3625 dollars late in New York on Monday. The euro is close to its record high against the dollar, which stands at 1.3682 dollars and was reached on April 27. Partly explaining the dollar`s weakness, ABN Amro economist Melinda Smith said in London: "It is evident the market remains concerned about the (US) sub-prime mortgage delinquencies fallout on the financial sector and the housing market." Meanwhile with a dearth of data on both sides of the Atlantic, analysts said markets are positioning themselves ahead of Tuesday`s speech on inflation from the US Federal Reserve chairman Ben Bernanke. The market will be monitoring it to see if he retains the more hawkish tone seen in the minutes from the US central bank`s most recent interest-rate meeting, dealers said. Most Fed watchers believe that Bernanke will repeat the minutes` statement that said inflation may not slow in line with expectations, partly because of the tightness in the labour market, evident in June`s strong payrolls data. While the Fed is likely to keep its benchmark Fed funds rate unchanged at 5.25 percent over the coming months, the European Central Bank is poised to lift its refi rate to 4.25 percent. The foreign exchange market has been focusing on widening interest rate differentials, prompting them to sell low-yielding currencies such as the yen and to invest in higher-yielding assets such as the euro and the pound. The Bank of England is expected to raise interest rates to 6.00 percent from 5.75 percent before the end of 2007. Rising British borrowing costs have sent the pound to 26-years highs above 2.0 dollars in recent weeks. "The belief that most central banks will increase interest rates while the Fed holds US interest rates steady, together with high oil prices, will keep the dollar on the defensive," said Antonio Febres at PNC Bank. "Although traders were impressed with last Friday`s payroll data, which showed 132,000 jobs created in June and was a higher-than-expected number, the dollar failed to rally." The euro was changing hands at 1.3660 dollars, against 1.3625 dollars late on Monday, 168.16 yen (168.11), 0.6766 pounds (0.6760) and 1.6576 Swiss francs (1.6578). The dollar stood at 123.23 yen (123.37) and 1.2147 Swiss francs (1.2165). The pound was being traded at 2.0166 dollars (2.0151). On the London Bullion Market, the price of gold eased to 661.15 dollars per ounce, from 661.25 dollars late on Monday.