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Trichet Says Inflation Risks “Balanced”

The euro declined for the second day following European Central Bank President Jean- Claude Trichet’s assessment that the risk of inflation within the Eurozone is “broadly balanced”. The market interpreted the comment as further evidence that the ECB is not considering a rate hike in the near term.

“The market got a little bit ahead of itself in pricing in an interest-rate hike as soon as this summer,” said Jane Foley, a senior currency strategist at Rabobank in London. “We don’t expect the ECB to be hiking rates until October or November so there’s room for a little bit of disappointment, which could result in a correction in euro-dollar.”

Source: Bloomberg [1]

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Scott Boyd

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