The US dollar has advanced against the euro this morning, at 10 AM in London the US dollar to Euro exchange rate was 0.260% higher with 1 USD = 0.7219 EUR. The US dollar to British Pound exchange rate is however 0.063% lower against the pound, the USD GBP rate is at 0.6259. "The euro lost substantial ground against the US dollar yesterday, after a surprisingly dovish policy announcement from the European Central Bank," says a note from UK money transfer company Caxton Fx. ECB President Jean-Claude Trichet emphasised downside risks to eurozone growth, amid calls for the central bank to reverse the rate hikes it made in April and July, which many now consider to be mistakes. However, the ECB kept rates on hold at 1.5% for now, although the market has begun pricing in at least one rate cut for the eurozone by the end of the year, which is adding further pressure to the euro. The ECB also cut its 2011 growth forecast to 1.6 percent from 1.9 percent and its 2012 projection to 1.3 percent from 1.7 percent, while the OECD said yesterday that it expects Germany’s economy to contract by 1.4 per cent in the final quarter of 2011. There are no key economic releases from the eurozone today, However the Group of Seven finance chiefs begin a two day meeting in France today, with many calling for the G7 to offer a coordinated plan to deal with the European debt crisis and the risk of a global recession. The euro, which rather like the equity markets has been pretty resilient in recent days, finally dipped below the 1.4000 and ended its session there too. The ECB’s statement which was more bearish than simply dovish wasn’t received well by holders of the euro and so the single currency suffered as a result," says a morning note from Simon Denham at Capital Spreads.

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