Euro Moves Higher as Euro Central Bank President Shifts Focus From Greece

The euro moved 0.54% higher against the dollar at $1.4363 today as traders are optimistic about the upcoming vote on austerity measures in Greece on Wednesday. The European Central Bank President, Jean-Claude Trichet, shifted the focus from Greece to the fighting Europe’s inflation after he hinted at interest-rate hikes in the future. Trichet was quoted by the Dow Jones Newswires as saying he is in a “strong vigilance mode” on inflation. Many analysts expect that this will mean a rate hike on its key lending rate when it meets on July 7.

Analysts also agreed that the French bank plan proposed on Monday, which would allow Greece to pay back their debts to French banks at a slower rate, has helped calm the market and counters the risk of default over the next few years.

The DXY fell another 0.27% today as the dollar fell against most major currencies. The Australian dollar is up 0.91% against the dollar and the British pound is up 0.01% against the dollar. The dollar did however gain ground against the yen, up 0.32%.

Depending on how the Greek austerity vote goes will determine how the euro trades later this week. Also many currency traders now believe QE3 is not as likely as previously thought and are adjusting their positions.

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About Rachel Brook

Rachel Brook is an up and coming financial writer focusing on commodity price inflation and how the overall market reacts to the price swings. She also covers emerging markets in Africa and SE Asia.

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