By: Barbara Zigah

The Euro held steady versus the U.S. Dollar in Asian trading ahead of today’s ECB meeting, which many hope will end with a rate reduction or more easing. While the head of the ECB, Jean-Claude Trichet, has maintained his hawkish tone, renewed calls for additional stimulus to spur the sluggish Eurozone economy may be enough to sway the policymakers. Clearly, many believe that the ECB holds the key to economic recovery and are expecting some response to the growing crisis. Analysts believe that inflationary pressures will keep the ECB from considering a rate cut at this time, but are more confident that some support for the Eurozone banking system will be provided which could support the common currency.

As reported at 11:50 p.m. (JST) in Tokyo, the Euro was trading at $1.3345, rebounding late from N.Y. trading following the news that the German government would provide financial assistance to German banks if needed. Since a late August peak, the Euro has lost nearly 10% of its value against the U.S. Dollar. Most recently, the EUR/USD pair was trading at 1.3328; investors are expected to be very cautious in the build up to the ECB decision.

The Bank of England will also hold its meeting of the Monetary Policy Committee today; the government has been adamant that they would maintain the status quo, but a slowing economy and more calls for easing are putting significant pressure on the policymakers.