FOREX-Euro falls as Trichet says lower inflation risks

Thu, Oct 2 2008, 13:00 GMT
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NEW YORK, Oct 2 (Reuters) - The euro extended losses against the U.S. dollar on Thursday after ECB President Jean-Claude Trichet said inflation risks in the euro zone have diminished.

Trichet was speaking after the European Central Bank held its benchmark rate steady at 4.25 percent.

"I think it's a bit of a lose-lose for the euro going into Trichet's speech," said Vassili Serebriakov, senior currency strategist at Wells Fargo in New York. "His remarks were quite dovish and it's a negative for the currency. The market's reaction is fairly straightforward and the euro is reacting on weak fundamentals."

The euro slipped against the dollar to $1.3807 from where it traded at $1.3880 before Trichet began speaking. The euro is now down 1.5 percent on the day.

(Reporting by Nick Olivari and Gertrude Chavez-Dreyfuss; Editing by Theodore d'Afflisio)

((nick.olivari@thomsonreuters.com; +1 646 223 6151; Reuters Messaging: nick.olivari.reuters.com@reuters.net)) Keywords: MARKETS FOREX

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