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FX round-up: Dollar hits new low against euro

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Date: Thursday 17 Apr 2008

LONDON (ShareCast) - The dollar remained under pressure on Wednesday against most major currencies and hit an all time low against the euro following a stronger than expected inflation report from the European Union.

The report showed inflation in the euro zone rose to 3.6% in March on the back of higher heating and transport fuel costs. Bread and dairy product prices also rose.

The report reduced expectations that the ECB will reduce interest rates from 4% as the central bank’s main concern is keeping inflation in check.

Meanwhile in contrast the Federal Reserve has been cutting interest rates in a bid to combat the economic slowdown.

Sterling hit a new record low against the euro as traders mulled the EU inflation report.

The Bank of England is expected to keep cutting interest rates to spur economic growth while expectations of an ECB rate cut are diminishing.

While the latest report showed EU inflation is rising, a report out earlier in the week showed a smaller than expected increase in British consumer prices in March.

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