The euro soared to a 10-month high against the dollar today. It changed hands at $1.1034 in Asian trading. This is the highest point for the coin since April 4. The euro also gained 1.2% in the previous session. Investors await the European Central Bank meeting to get clues about its policy plans.
Chris Turner, ING’s global head of markets, said markets expect a 50bp rise, along with a further 75 or 100bp rise in the summer. He also added that if the bank continues to hike rates, the EUR/USD pair could go even higher. The euro could easily reach the $1.15 area in the spring.
The US Federal Reserve announced that it may change its aggressive policy regarding future rate increases. Inflation is slowing down in the country. Thus, the Fed could start lowering rates, especially considering that the country’s economy is entering a recession.
On Wednesday, Fed Chairman Jerome Powell declared that the agency had started the disinflation process. However, he also assured markets that the central bank is not planning to start cutting rates any time soon. Despite that, the US dollar plunged overnight.
The US dollar index plunged more than 1% in the previous session, hitting a fresh nine-month low of 100.80. The coin changed hands a bit higher at that point today.
Traders expect the US Nonfarm Payrolls report to show how the Federal Reserve’s fight against inflation is faring. According to official statistics, job offers increased last month. That news surprised the markets, but the dollar remains low for now.
How are sterling and other major currencies doing?
The British pound settled at $1.236 on Thursday after advancing 0.47% in the previous session. The Bank of England will meet later today, as will the ECB. Investors believe that the BOE will raise rates by half a point. Meanwhile, the Swiss franc has risen to its highest point since late 2021.
In Asian trade, the dollar fell against the Japanese currency. It plunged to 128.07 yen, hitting its lowest level in two weeks. Elsewhere, the Australian dollar rose to a fresh eight-month high of $0.7158 in early Asian trade today. The Aussie also added 1.2% in the previous session.
Also, emerging market currencies were trading in the green on Thursday. They reached their highest peak in more than nine months. But the Czech crown was an exception. He remained muted today. The Turkish lira fell against the dollar, while the Russian ruble rose.
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