Connect with us
Our website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

Trading

Dollar slips as ECB rate hike hopes lift euro

Dollar slips as ECB rate hike hopes lift euro 1

By Saqib Iqbal Ahmed

NEW YORK (Reuters) – The dollar fell against the euro for a third straight session on Tuesday, following a Reuters story that European Central Bank policymakers are considering raising interest rates by a bigger-than-expected 50 basis points at their meeting on Thursday to tame record-high inflation.

The rebound in the euro, which sent it further away from the sub-parity levels of last week, coincided with falling expectations for an aggressive 100 basis points hike from the U.S. Federal Reserve this month, which knocked the dollar.

“Currencies continue to revolve around expectations for central bank policy,” said Joe Manimbo, senior market analyst, at Western Union Business Solutions in Washington.

“We are now seeing a subtle but meaningful shift in the outlook for trans-Atlantic monetary policy, and that’s proving a good thing for the euro,” Manimbo said.

The euro rose to as high as $1.0269, up 1.2% on the day and its strongest since July 6 as money markets priced in a 60% chance of a 50 basis points hike on Thursday, up from 25% on Monday.

Investors were also keeping an eye on political drama in Rome with the Italian government mired in uncertainty over whether Mario Draghi will continue as Prime Minister.

“Italy without Draghi would be a destabilising force and would tend to add to the recent euro weakness,” Manimbo said.

Against a basket of currencies, the dollar was 0.8% lower at 106.53, on pace for its third straight session of losses. The index remains close to the two-decade high of 109.29 touched last week.

Analysts are reluctant to turn bullish on the euro, however, given ongoing concerns about supplies of natural gas and the hit to its economy and how hawkish the ECB can really be.

“In our view, this bounce is likely to prove short-lived and should provide better entry levels for short euro positions,” said Dominic Bunning, head of European FX research at HSBC.

Graphic: Euro positions and volatility- https://fingfx.thomsonreuters.com/gfx/mkt/zgpomxangpd/euro%20positions%20and%20vol.JPG

Traders are also preparing to see whether Russian gas on Thursday resumes flowing through the Nord Stream pipe to Germany after a shutdown for scheduled maintenance.

Russian gas flows via the Nord Stream 1 pipeline are seen restarting on time on Thursday after the completion of scheduled maintenance, two sources familiar with the export plans told Reuters.

Elsewhere the Australian dollar soared 1.3% to $0.6903 after Reserve Bank of Australia policymakers said they saw the need for more policy tightening on top of recent hikes.

Sterling gained 0.6% to $1.2022, tracking the wider rebound against the dollar.

In cryptocurrencies, bitcoin slipped about 1% to $22,295.80, struggling to shrug off the weakness that has engulfed it in recent weeks.

(Reporting by Saqib Iqbal Ahmed in NEW YORK, Tommy Wilkes in LONDON; Additional reporting by Kevin Buckland in Tokyo; Editing by Alison Williams, David Evans and Jonathan Oatis)

Global Banking and Finance Review Awards Nominations 2022
2022 Awards now open. Click Here to Nominate

Advertisement

Newsletters with Secrets & Analysis. Subscribe Now