Forex- Euro edges back up after short-lived dip on Trichet comments |
|
|
|
Published
:
Thu, 12 Apr 2007 15:18
|
LONDON (Thomson Financial) - The euro edged back up against the dollar after a small dip, in the wake of comments by European Central Bank president Jean-Claude Trichet suggesting that the next interest rate hike will come in June not May, proved short-lived.The ECB left euro zone interest rates unchanged at 3.75 pct today as expected, with a further rate rise anticipated soon, most likely in June.Ahead of today's meeting, however, there had been some speculation in the market that the ECB could move as early as next month. In his accompanying statement, Trichet said the ECB is monitoring inflation risks have ry closely', but did not use the key word 'vigilance' that he usually uses to signal a rate hike at the subsequent meeting, making a hike in May unlikely.Nevertheless, Trichet highlighted that interest rates remain 'accomodative' and continued to suggest that rates will rise to 4.0 pct soon.'While the ECB failed to mention that 'strong vigilance' is needed to ensure euro zone price stability over the medium term -- thereby effectively ruling out another move as early as May -- there were broad hints that interest rates will rise by a further 25 basis points to 4.0 pct in June,' said Howard Archer at Global Insight.'It is clear that the central bank believes that its work is not yet done,' he added.At 2.50 pm, the euro was trading at 1.3480 against the dollar, up from 1.1360 just before Trichet's press conference began. During the speech the euro dipped to a low of around 1.3447.jessica.mortimer@thomson.comjkm/ejpCOPYRIGHTCopyright AFX News Limited 2007. All rights reserved.The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
|
|
|
|
Print this Story
Euro group's Juncker, EU presidency's Steinbruck upbeat on inflation UPDATE 