Euro Falls on EU Clash, Rate Speculation

[Renew Deal]

By David McMahon
TOKYO (Reuters) - The euro lost ground against major rivals on Thursday, hurt by a spat among European leaders and speculation that the U.S. Federal Reserve will raise interest rates more aggressively than previously thought.

New York Fed President Timothy Geithner said on Wednesday the central bank was determined to defend price stability and support the U.S. economic recovery, and Kansas City Fed President Thomas Hoenig said it would act decisively to keep prices in check.

Those hawkish comments in the United States came in the wake of remarks by Fed Chairman Alan Greenspan, who said earlier in the week that the Fed would do "what is required" to keep inflation in check.

"The euro is clearly being hurt by the Fed comments, and by the easing of oil prices which is leading many to take profits after buying on the assumption the euro would suffer least if oil prices continued to rise," said Mitsuo Imaizuni, deputy general manager of the forex department at Daiwa Securities SMBC.
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http://www.reuters.com/newsArticle.jhtml?type=businessNews&storyID=5388412