Euro weaker after rate increase

Story link: Euro weaker after rate increase

The euro weakened Thursday after the European Central Bank raised Eurozone interest rates to 4.25 percent, a gain of a quarter of a percentage point to, to try to bring inflation in check in the region.

However, in comments issued with the announcement, ECB president Jean-Claude Trichet hinted that this might be the last rate hike in the region for awhile.

In addition, the ECB said that economic growth in the Eurozone could drop to 1.5 perent in 2009 from 1.8 percent this year.

At 12:30 p.m. in New York, it took $1.5691 to buy an euro, while a euro was worth ¥167.4910 and it took 79.25p to buy a euro.

While the pound strengthened on the basis of Mr. Trichet’s comments, it was weaker in relation to the US dollar after new data from the Chartered Institute of Purchasing and Supply showed that the UK service sector contracted in June.

In early afternoon trade in New York, it took $1.9824 to buy a pound.

The Canadian dollar weakened in relation to the US dollar on a report showing that the US unemployment rate was unchanged in June.

While the US lost 62,000 jobs in June, the unemployment rate remained at 5.5 percent.

At just past noon in New York, the Canadian dollar traded at C$1.0216 to the greenback.