THE EURO rose to a record against the dollar after European Central Bank (ECB) president Jean-Claude Trichet said there was "strong upward pressure on inflation", signalling he is in no hurry to cut interest rates.
Europe's 15-nation currency also reached an all-time high against sterling as policymakers left the main rate at 4 per cent.
Mr Trichet's comment "gives the green light to sell the dollar", said Alan Ruskin, head of international currency strategy in North America at RBS Greenwich Capital Markets in Connecticut. "He's suggesting the ECB won't do anything overt to support the dollar."
The euro climbed to $1.5378, the highest level since the single currency's debut in 1999, before trading at $1.5369 at 2.16pm in New York, from $1.5265 yesterday. The euro set a record for the seventh trading day in the past eight.
Crude oil rose to a record $105.97 a barrel in New York as the dollar weakened.
"As long as the funds and other speculators are seeking returns from commodities that aren't available with bonds, equities or real estate, prices will stay high," said Addison Armstrong, director of market research at Tradition Energy in Connecticut.
"The latest information has confirmed the existence of strong upward pressures on inflation," Mr Trichet said at a press conference in Frankfurt. He also said policymakers "don't underwrite the present future market interest rates" and said he noted "with extreme attention" remarks from President George W Bush last week that a strong dollar is in US interests.
The euro advanced against sterling earlier after the Bank of England kept borrowing costs at 5.25 per cent. The currency climbed to an all-time high of 76.92 pence, before trading little changed at 76.54 pence.
Futures show traders see a 74 per cent chance the Fed will lower its target rate 0.75 percentage point to 2.25 per cent on March 18th. A half-point cut appears the likely course.
"Trichet made it pretty clear that the ECB won't be cutting rates anytime soon whereas the Fed is going to be cutting," said Greg Anderson, a foreign-exchange strategist at ABN Amro in Chicago. The euro may reach $1.55 by the middle of next week, he said.
