The euro scraped parity with the dollar in early deals today ahead of what is widely expected to be the European Central Bank's (ECB) first rate cut announcement in 13 months "We've never before been so certain that a rate cut is imminent - the frankness of comments from ECB members over the past few weeks has been extraordinary. We've even heard an acknowledgement that a cut in rates will have the effect of giving the Eurozone a psychological boost - this kind of language from the ECB is unheard of," said Niall Dunne of Ulster Bank Financial Markets this morning
"The weight of expectation in the market is now so great that any cut smaller than 50bps will disappoint and probably see the euro sold in punishment," he added Dunne noted, however, that only yesterday the Spanish member of the ECB commented that any rate cut would only harm his country, because of it's potential inflationary impact. As a result, he said the signs were pointing to a typically cautious 25bps move// www.fxcentre.com