Dollar drops against euro as ECB hints of September rate hike
AFP, August, 2007
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NEW YORK (AFP) — The dollar weakened against the euro Thursday after European Central Bank president Jean-Claude Trichet hinted strongly that the bank's key interest rates would be raised in September.
Trichet spoke after the ECB's top officials opted to leave the bank's refinancing rate unchanged at 4.0 percent for the second consecutive month earlier Thursday.
The euro was swapping hands at 1.3703 dollars at 2100 GMT, up from 1.3666 dollars late on Wednesday in New York trading.
The euro gained as traders bid up the odds of a possible ECB rate hike. Rate hikes can boost a currency's strength as speculators can bank potentially higher yielding returns.
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The euro gained after Trichet told journalists the ECB was exercising "strong vigilance" in the face of inflationary risks.
The term has been used in the past to indicate that rates will be raised ...
