The Euro Hit A High On Thursday. What About The Sterling?
The euro skyrocketed to a 10-month peak versus the greenback today. It exchanged hands at $1.1034 in Asian trading. This is the currency’s highest point since April 4. The euro also gained 1.2% in the previous session. Investors are waiting for the European Central Bank’s meeting to get clues about its policy plans.
Chris Turner, the global head of markets at ING, noted that markets expect a 50bp increase, along with a further 75 or 100bp hike in the summer. He also added that if the bank continues with rate hikes, the EUR/USD pair might rally even more. The euro could easily reach the $1.15 area in the spring.
The U.S. Federal Reserve announced that it might change its aggressive policy regarding future rate increases. Inflation is slowing in the country. Thus, the Fed might start lowering rates, especially considering that the country’s economy is going into a recession.
On Wednesday, Fed Chair Jerome Powell declared that the agency had started the disinflationary process. However, he also assured markets that the central bank doesn’t plan to start cutting rates in the short term. Despite that, the U.S. dollar plunged overnight.
The U.S. dollar index plummeted by more than 1% in the previous session, hitting a new nine-month low of 100.80. The currency exchanged hands a bit higher at that point today.
Traders expect the U.S. nonfarm payrolls report to show how the Federal Reserve’s fight against inflation is going. According to official statistics, job openings increased last month. That news surprised markets, but the dollar remains low for now.
How are the sterling and other major currencies faring?
The British Pound stood at $1.236 on Thursday after surging forward by 0.47% in the previous session. The Bank of England will meet later today, like the ECB. Investors think the BOE will hike rates by a half-point. Meanwhile, the Swiss franc has rallied to its highest point since late 2021.
In Asian trade, the greenback declined against the Japanese currency. It plunged to 128.07 yen, hitting its lowest level in two weeks. On the other hand, the Australian dollar surged to a fresh eight-month peak of $0.7158 in early Asia trade today. The Aussie also added 1.2% in the previous session.
Moreover, the EM currencies traded in the green on Thursday. They rallied to their highest peak in more than nine months. But the Czech crown was an exception. It remained muted today. The Turkish lira declined versus the dollar, while the Russian ruble climbed.