The euro declined this morning falling by 0.9 percent to $1.4695 in early afternoon trading in London after European Central Bank President Jean-Claude Trichet hinted that an interest rate hike will not be imposed next month. Trichet said that the Bank will watch inflation rates “very closely” leading most observers to conclude there will be no change to interest rate policy until July at the earliest.
“By signaling that a June rate hike is not likely, Trichet has put the euro under pressure,” said Kasper Kirkegaard, a senior currency strategist at Danske Bank A/S in Copenhagen. “A June hike has to be priced out of the market.”
Source: Bloomberg