SYDNEY (XFN-ASIA) - The US dollar was firmer against the yen here but down against the euro ahead of tonight's European Central Bank meeting, dealers said.
They said interest rates in the euro zone are not expected to be changed, while attention will focus on ECB president Jean-Claude Trichet's outlook statement and signals that the central bank may hike interest rates at its next meeting in May.
At 2:20 pm in Sydney (0420 GMT), the dollar was at 119.45 yen from 119.35 in Sydney morning trade while the euro was at 1.3460 usd, higher from 1.3438 earlier.
CMC Markets chief analyst Ashraf Laidi said the upward course of the euro remains safely in check even in the case of a pullback to as low as 1.3280 usd with traders continuing to deem the pair as fundamentally and technically sound, with periodic dips seen as opportune entry points.
GFT senior analyst Ian Copsey said the immediate risk for the US dollar still appears to be to the downside but there are signs that these will not develop in a trend and should, before too long, cause a more significant correction.
He said despite the consensus that euro zone rates will be left unchanged, political pressures from member countries over the high level of the euro and interest rates will remain ahead.
This includes France which is due to undergo the first round of presidential elections on April 22 followed by the second round of voting on May 6.
However, Copsey noted, 'Trichet has tended to almost shun any pressure with what appears to be a single minded determination to employ his own policies.'
Meanwhile, the Australian dollar hit a fresh 16-year high of 0.8274 usd. The Australian Bureau of Statistics (ABS) released data showing the jobless rate fell back to a seasonally adjusted 30-year low of 4.5 pct in March, after coming in at 4.6 pct in February.
Westpac Bank strategists said the Australian dollar has benefited from a steady string of positive data and events in recent sessions so today's labor data adds to the general feeling of optimism towards the currency.
They noted there are increasingly risks that some of the positives may be starting to fray slightly including suggestions the level of Rinker shareholder uptake for Mexico's Cemex 14.2 bln usd takeover bid may be low, while there are possibilities over the coming weekend that the G7 meeting will comment on the yen carry trade.
But, they said, 'this has not stopped the Australian dollar from making fresh highs for the move and with the US dollar on the back-foot, it is hard not to see this move continuing for now.'
Sydney 2.20 pm (0420 GMT) vs Sydney 9.53 am (2353 GMT)
US dollar
yen 119.45 vs 119.35
sfr 1.2206 vs 1.2202
Euro
usd 1.3460 vs 1.3438
yen 160.76 vs 160.36
sfr 1.6429 vs 1.6397
stg 0.6817 vs 0.6800
Sterling
usd 1.9746 vs 1.9757
yen 235.79 vs 235.76
sfr 2.4100 vs 2.4104
Australian dollar
usd 0.8250 vs 0.8244
stg 0.4179 vs 0.4173
yen 98.530 vs 98.375
New Zealand dollar
usd 0.7269 vs 0.7278
paul.daniel@xfn.com
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