Euro weaker despite Trichet comments

Story link: Euro weaker despite Trichet comments

The euro weakened versus the US dollar, the yen, and the Swiss franc on Wednesday as investors didn’t buy into remarks from European Central Bank president Jean-Claude Trichet that he is determined to keep inflation under control.

The general consensus, however, is that the ECB will likely have to follow the Federal Reserve and cut interest rates, with some expecting two rate cuts this year as US economic troubles affect other economies.

It took $1.4570 to buy a euro, but by just after noon in New York, the euro had come back a bit and was trading at $1.4561 to the euro.

At the same time the Swiss franc, which was stronger in relation to all major currencies, was at SFr1.5887 to the euro

The yen, meanwhile gained not only versus the euro but matched the Swiss franc in strengthening against all major currencies during the day as both currencies were helped out by a continuing aversion to risk.

In early afternoon trade, the yen was at ¥153.5727 versus the euro while it traded at ¥105.4650 to the dollar and at ¥205.6670 to the pound.

The yen’s biggest gains came against the Norwegian krone and the Brazilian real, where it traded at ¥18.942 and ¥57.880 respectively after Norway’s central bank held interest rates steady and Brazil’s central bank is expected to do the same.

A report showing that the UK economy grew at its slowest pace in over a year in the fourth quarter of 2007 raised expectations that the Bank of England will cut interest rates soon and weakened the pound.

While the UK currency traded about even at 74.67p to the euro, the cost of a pound dropped to $1.9501 in early afternoon trade in New York, a little better than the $1.9498 it touched in late afternoon trade in London.