| 4/21/2008
2:54 PM: EUR/$..1.5913 $/JPY..103.12 GBP/$..1.9794
$/CHF..1.0074 AUD/$..0.9422 $/CAD..1.0060
Euro Climbs on Hawkish ECB
The greenback came under renewed selling against
the euro, falling to 1.5946, just shy of its all-time
lows at 1.5978. Amid a dearth of economic data
at the start of the week, markets focused on comments
from central bank officials. Hawkish commentary
from ECB officials highlighted the differences
in policy stances between the ECB, the FOMC and
BoE, with the Eurozone economy exhibiting greater
resilience to the global economic downturn.
The economic calendar picks up on Tuesday, with
the Bank of Canada scheduled to announce its policy
decision at 9:00 AM and is seen cutting interest
rates by 50-basis points to 3%. Meanwhile, US
reports slated for release will see March existing
home sales and the April Richmond Fed survey.
Existing home sales in March are expected to decline
to 4.92 million units, down from February at 5.03
million units.
Euro Buoyed on Hawkish Comments
A barrage of ECB officials reiterated the Bank’s
tightening bias in policy, with the comments echoing
a similar tone on inflation. ECB Bank President
Trichet said that anchoring inflation expectations
was the governing council’s top priority.
He added that future risks to banks mainly relate
to adverse credit cycle developments and disorderly
unwinding of global imbalances. The ECB’s
Weber said that Eurozone inflation was well about
the Bank’s tolerance threshold and will
assess in the coming weeks whether current interest
rates are still appropriate. He said the ECB would
actively and decisively combat risk of widespread
second-round effects and that decisive action
on price stability is seen as the best contribution
to helping growth. Further, he added there are
strong upward risks to prices in the medium-term.
Meanwhile, Governing Council member Noyer said
that inflation needed to be brought down as soon
as possible and Papademos added that there should
be no doubt of the Bank’s primary objective.
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