US focus: Euro reaches 17-month high on ECB

The euro reached its highest level in 17 months against the dollar on speculation European Central Bank President Jean-Claude Trichet will signal further rate increases after policy makers meet tomorrow.
The market “expects that the ECB is on a tightening path,” said Jessica Hoversen, an analyst at MF Global Holdings Ltd.
The ECB raised its benchmark interest rate to 1.25% on April 7 from a record low 1%%. Some economists expect it to signal tomorrow another boost will come as soon as June.

The U.S. dollar fell versus the euro on weaker-than-forecast economic data and speculation the Federal Reserve will maintain economic stimulus.
The Institute for Supply Management’s index of non-manufacturing companies fell to 52.8 in April, the lowest since August. It was 57.3 in March, and economists forecasted a reading of 57.5.
ADP Employer Services data showed employment at U.S. companies increased by 179,000 jobs in April, compared with a revised 207,000 in March. The median estimate called for a 198,000 advance this month.
Fed Chairman Ben S. Bernanke said last week after a policy meeting he was unsure when the U.S. central bank’s monetary stimulus will unwind. The benchmark U.S. rate has been zero to 0.25% since December 2008 to support the economy. The Fed’s program to spur growth by purchasing $600 billion in Treasuries will end in June, as planned, policy makers decided.
The Canadian dollar fell for a third day against its U.S. counterpart, the longest losing streak since March, as crude oil dropped. The commodity is Canada’s biggest export.
The pound touched its lowest level in more than a year against the euro after reports showed U.K. house prices fell and construction growth slowed, discouraging the Bank of England from boosting borrowing costs tomorrow.