Forex - US dollar softer in Singapore afternoon trade as ECB meeting looms

Forex - US dollar softer in Singapore afternoon trade as ECB meeting looms

	Published : Thu, 12 Apr 2007 09:12 By : Agencies Print this Story

SINGAPORE (XFN-ASIA) - The US dollar was softer against the yen and euro in afternoon trading here, with the euro bolstered by expectations of a hawkish statement by the European Central Bank (ECB) after its meeting later today, dealers said.

At 3.33 pm here (0735 GMT), the dollar was at 119.25 yen, down from 119.45 yen in Sydney exactly 3-1/4 hours earlier. The euro was at 1.3471 usd, up from 1.3460 usd in Sydney.

Dealers said the market expected the ECB to keep its benchmark refinance rate steady at 3.75 pct at today's meeting.

They said this meant ECB president Jean-Claude Trichet's post-meeting news conference would thus become the highlight, with many expecting him to sound a slightly hawkish note, perhaps even using the word 'vigilant', which might indicate an increase in the refi rate at the bank's next meeting.

UOB said in a market note: '[The] risks are towards ECB upping the hawkish stance.'

It added: 'With ECB rhetoric expected to set the stage for a June hike to 4 pct, with risks towards 4.25 pct over the second half, euro-dollar should see a move towards 1.3480 usd. Momentum trading on carry trades should see euro-yen eyeing a test of 161.00 yen.'

Looking ahead, the meeting of the central bankers and finance ministers of the G7 countries starts Friday in Washington, although there appears to have been less concern in recent days about the effect of this on forex markets, dealers said..

They said European officials had been fairly restrained about commenting on the yen's weakness before this weekend's meeting.

DBS Bank said in a note: 'The Europeans are likely to take their case to the sidelines.'

It added: 'These concerns demonstrate that the Europeans fear the euro bearing the brunt of the next phase of currency adjustment to address global imbalances.'

Singapore 3.33 pm (0735 GMT) vs Sydney 2.20 pm (0420 GMT)

US dollar

yen 119.25 down from 119.45

sfr 1.2186 down from 1.2206

Euro

usd 1.3471 up from 1.3460

yen 160.68 down from 160.76

sfr 1.6418 down from 1.6429

stg 0.6813 down from 0.6817

Sterling

usd 1.9777 up from 1.9746

yen 235.80 up from 235.79

sfr 2.4100 unchanged

Australian dollar

usd 0.8259 up from 0.8250

stg 0.4176 down from 0.4179

yen 98.510 down from 98.530

singapore@xfn.com