Euro pushed up on Europe rate hike talk

February 24, 2011 | 08:00

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The Euro jumped against the US dollar Thursday despite the turmoil in Libya as traders focused on the possibility that inflation pressures will soon lead to a hike in European interest rates.

At 2200 GMT the euro surged nearly one cent to $1.3746 from $1.3656 late Tuesday.

The dollar also gave up ground to the Japanese currency, trading at 82.46 yen, down from 82.74 yen a day earlier.

The focus turned away from the violence in oil exporter Libya, which sent crude prices flying and stock markets falling, to anticipated moves by the European Central Bank to squelch inflation pressures with an increase in interest rates.

"Recent comments from ECB policymakers and the inflation impact of higher oil prices have moved expectations ahead of next week’s central bank announcement in a more hawkish direction," said Vassili Serebriakov of Wells Fargo.

The pound gained on the dollar as well as Bank of England meeting minutes showed a rise in concern there over inflationary pressures.

The sterling moved to $1.6210 from 1.6136.

The dollar weakened slightly against the Swiss franc, buying 0.9330 compared to 0.9380 a day earlier.

AFP

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