Wednesday 23rd April 2008

The mighty Euro is holding near a record high ($1.6018) against the US dollar as its yield advantage and inflation vigilant ECB talk attracts traders and investors. Overnight ECB Noyer has attempted to play down his hawkish comments of the previous day by claiming EZ interest rates could move either way but has insisted that inflation returns to 2 per cent next year. With oil prices hitting a fresh high yesterday the ECB has no option other than to retain this vigilant approach to inflationary pressures. Overnight the Aussie has been well bid as economic data shows that core inflation accelerated to its fastest pace in nearly 17 years last quarter. The Kiwi also is nicely bid ahead of the RBNZ rate decision due out late tonight although the consensus is for a hold at 8.25 per cent. Overall dollar pressure to continue and further gains (no straight line) for the Euro.