The euro traded little changed against the yen, near an all-time high, after the European Central Bank left interest rates unchanged, as expected.
The common currency also traded at its highest versus the dollar since May 1 after the central bank left its benchmark at a six-year high of 4 percent. Economists, who predicted the outcome, expect President Jean-Claude Trichet to suggest at a press conference further increases this year. The pound was near its strongest against the dollar in 26 years after the Bank of England raised rates today.
``All in all, I expect quite a hawkish outcome from the ECB,'' said Hans Guenter Redeker, head of currency strategy at BNP Paribas SA in London. ``That requires a higher euro at the moment.''
The euro rose to a record high of 167.28 yen before trading at 167.08 as of 12:48 p.m. in London from 167.04 yesterday. It was at $1.3634 against the dollar from $1.3613 yesterday and an all-time high of $1.3681, reached on April 27.
The pound traded at $2.0179 after touching $2.0207 yesterday, the most since June 1981. It has advanced 2.9 percent this year as the yield advantage of U.K. two-year notes over Treasuries rose to near the most in two years.
Economists surveyed by Bloomberg News forecast ECB policy makers will increase the key refinancing rate in September to 4.25 percent. The BOE raised its main rate by a quarter point to 5.75 percent today. The Federal Reserve kept its overnight lending rate at 5.25 percent last week.
source:bloomberg.com
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