By: Barbara Zigah
The common currency Euro slipped slightly against the U.S. Dollar in Asian trading today as Jean-Claude Trichet, the head of the European Central Bank, noted that he shares the same view as other central bankers that the a U.S. Dollar is in the best interest of the United States economy. Some analysts see that comment as evidence that the ECB is growing frustrated with the handling of monetary policy by the U.S. Federal Reserve, which has allowed the U.S. Dollar to depreciate significantly over the last several months. As reported at 2:31 p.m. (JST) in Tokyo, the Euro was traded at $1.4532, a decline of 0.3% and well off the 16-month peak struck last week when the pair hit $1.4649. Analysts say the Euro, which has been steadily rising against the greenback, was ready for a pull-back.
Speaking to reporters, Trichet commented that he didn’t see second-round inflation as a significant threat, comments which prompted some traders to dump their long positions in the common currency. Overall, however, most market players are certain that the greenback will be under pressure for the long term, given that the Federal Reserve is unlikely to alter its current ultra loose monetary policy.