Euro falls on Trichet’s comments

The euro fell against the dollar on Thursday after European Central Bank President Jean-Claude Trichet said the euro zone was in an episode of weak economic activity.
The euro was last down 0.2 percent at $1.4458, compared with $1.4480 before Trichet's comments.
"It looks the euro is weakening off a little bit as the market seizes on President Trichet's observation that the euro zone economy is in an episode of weak activity," said Stephen Malyon, senior currency strategist at Scotia Capital in Toronto.
"However, Trichet continues to highlight upside risks to inflation suggesting policy makers aren't in any rush to lower rates," he added.
Sterling rose versus the dollar and euro on Thursday, while UK interest rate futures slipped and stock markets pared gains after the Bank of England kept interest rates on hold at 5 percent, as expected.
The pound had started slipping just prior to the decision as markets had priced in a 25 percent chance of a surprise interest rate cut.
Sterling was up 0.4 percent on the day at $1.7816, having fallen to $1.7768 just before the verdict. The euro hit session lows of 81.25 pence. It earlier moved to record highs at 81.86 pence.
Short sterling interest rate futures slipped a tick or two on the decision, to stand between one and 2.5 ticks lower on the day.
The December gilt future pared gains to stand 4 ticks higher on the day having been 9 ticks higher beforehand.
The FTSE 100 pared gains after the decision, up 0.55 percent. Analysts said the overall UK economic outlook remained dire, with rate cuts still on the cards before the end of this year.
"The decision for the Bank to sit on its hands once more was no surprise, however evidence is rapidly mounting that the UK is edging ever closer to recession.