Euro Near 17-Month High vs Dollar, ECB Hike Timing Key

(TRADINGNEWSBULLETIN.COM, May 05, 2011 ) Vancouver, BC -- The euro held close to a 17-month high level against the dollar on Thursday as markets waited for the European Central Bank to strengthen superior rate outlook, with a clue of a June climb required to increase the currency more.

Markets players says that if ECB President Jean-Claude Trichet indicated April’s increase would be trailed by one more as early as June with the slogan “strong vigilance” on cost pressures, the euro could get higher, but some analysts consider more advantage possible from Trichet’s words was restricted.

“Today it it will be difficult to surprise on the upside for the ECB and the euro as inflation expectations have remained stable over recent weeks and growth momentum has slowed,” said Manuel Oliveri, currency strategist at UBS in Zurich. ”Officially we expect the next ECB hike in July,” he added.

A huge choice structure with a barricade at $1.4950 was likely to limit more euro increase. Traders says that the structure would draw euro bids from the option owners to maintain the obstruction in place and increase a pay-out at end on Friday.

RBC analysts said in a communication, “With the forward curve already largely priced for the cumulative rate increases we expect for the remainder of the year (75 bps) and the market positioned for a very hawkish ECB, it would take a bringing forward of rate hike expectations to boost EUR meaningfully from current levels.”

The euro traded increase about 0.5 percent on the day besides the dollar at $1.4895. It moved up to a 17-month high of $1.4940 on Wednesday as the dollar draw closer under wide selling pressure.


Read more:http://www.tradingnewsbulletin.com/2011/05/euro-near-17-month-high-vs-dollar-ecb-hike-timing-key/



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