Market Review – 21/03/2011 20:14 GMT
Euro rises after ECB officials signal rate hike in April is ready
The single currency strengthened to a fresh 4-1/2 month high on Monday after European Central Bank governing council members signaled that European Central Bank is ready to raise interest rate in April to curb inflation despite the uncertainties related to Japan’s nuclear crisis together with the lingering eurozone woes.
Executive Board member Gertrude Tumpel-Gugerell said that ‘the European Central Bank is exercising strong vigilance and will act to counter inflationary pressures.’
ECB Governing Council member Yves Mersch said ‘ECB is ready to act decisively, timely to ensure price stability risks do not materialise.’
Earlier, the euro traded sideways in Asian session (Japanese financial markets were closed for Vernal Equinox Monday holiday) after rising above Friday’s high of 1.4185 to 1.4200 in New Zealand morning and despite a brief retreat from 1.4202 to 1.4138 at New York opening due to market talk that Portugal would need bail out as soon as in April, buying interest quickly emerged and lifted price, the single currency later climbed to a fresh 4-1/2 month high at 1.4240 in New York midday.
The British pound also rose against the dollar on Monday. Similar to euro, cable retreated to 1.6205 after rising to 1.6261 in New Zealand session, the pound continued to ratchet higher in tandem with euro in European and New York tradings and eventually hit an intra-day high of 1.6328 in New York mid-day.
In sharp contrast to last week’s volatile sessions, the dollar traded narrowly against the Japanese yen on Monday. The greenback edged higher following Friday’s selloff from 82.00 to 80.52 and touched 81.32 in European mid-day b4 trading sideways in New York session.
Data to be released on Tuesday include:
Japan all industry index, Swiss trade balance (chf), U.K. CPI, RPI, PSNCR, PS net borrowing and CBI Orders, US Richmond Fed manufacturing index, Canada Leading indicators and retail sales.