The euro declined for the second day following European Central Bank President Jean- Claude Trichet’s assessment that the risk of inflation within the Eurozone is “broadly balanced”. The market interpreted the comment as further evidence that the ECB is not considering a rate hike in the near term.
“The market got a little bit ahead of itself in pricing in an interest-rate hike as soon as this summer,†said Jane Foley, a senior currency strategist at Rabobank in London. “We don’t expect the ECB to be hiking rates until October or November so there’s room for a little bit of disappointment, which could result in a correction in euro-dollar.â€
Source: Bloomberg
