Euro Remains Strong as Speculators See No Rate Movement by ECB

Following speculation that the U.S. Federal Reserve may not cut interest rates further, the U.S. dollar surged against the Yen and the Euro in Thursday’s afternoon trading in Asia.  However many traders expect the Fed to cut interest rates by as little as 25 basis points next week and will attempt to keep interest rates steady going forward in order to curb inflation. 

Experts are of the opinion that further interest rate reductions may not necessarily be the best way to stimulate the economy and address the liquidity crisis.  In March, the U.S. consumer price increased by 0.3% from the previous month. 

On April 23 at 1:00 (05:00 GMT), in trading in Hong Kong, the Euro traded at $1.5847 compared to $1.5881 in early trading in Sydney, while the U.S. Dollar traded at 103.71 Yen compared to 103.37 Yen.

Earlier this week, the U.S. Dollar dropped below $1.6000 against the Euro following news that some European Central Bank officials may be contemplating the possibility of raising interest rates in the Euro zone.  However, the Euro retreated following news that rates will remain unchanged and the release of poor economic data from the Euro zone.  Latest report shows that Euro zone inflation rose to 3.6% which is above the 2% target set by the ECB for 2008, and is also the highest in 16 years.

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