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Euro pressured as ECB rate hike talk fade

TOKYO: The euro was under pressure against the yen and the dollar in afternoon Tokyo on Friday after speculation faded that the European Central Bank (ECB) may raise interest rates as early as next week.

The euro stood at $0.9915/19, versus $0.9929 in late New York trading on Thursday. Against the yen, the single currency was quoted at 109.88/87 yen, down from 110.35 yen in New York.

The dollar was quoted at 110.87/92 yen compared with 111.27 yen in late New York trading on Thursday. Its intraday low in Tokyo was 110.65 yen. The euro, which had risen to a one-month high of $1.0090 in Tokyo on Wednesday, dropped as low as $0.9888 overnight following comments by ECB Vice President Christian Noyer.

Noyer was quoted in on Thursday's Wall Street Journal Europe as saying the market may be misinterpreting the ECB's on February monthly bulletin and recent statements by ECB officials as preparing markets for an interest rate rise soon.

A Japanese city bank dealer said: "There may not be a rate hike at the next ECB meeting next week (March 2), but I still think there will be one soon after that."

Traders said the market was taken by surprise after becoming quite upbeat on Bundesbank President Ernst Welteke's comments the previous day that the eurozone supply of liquidity remained accommodative even after the ECB's rate hike on February 3.

They said, however, that Japanese investors were still in need to buy back euros against yen to unwind hedges.-Reuters