ECB Trichet Signals September Rate Hike

August 2, 2007

The ECB is suppose to be off enjoying their summer holidays, but instead of doing so, Central Bank Head Trichet held a “Special Press Conference” where he used the words “strong vigilance.” We have been watching for these codes words very carefully because over the past year, everytime he uses those words, rates are increased the following month. So expect a rate hike in September, but after that there should bea nice long pause because Trichet refused to say that rates remained accommodative, which indicates that he may be ready to pull the plug on further hikes. This is part of the reason why the EUR/USD has failed to react.

Posted in Carry Trades, Day Trading Currency, ECB, Forex, US Dollar