© Reuters
By Peter Nurse
Investing.com – The US dollar loses positions at the start of trading in Europe this Thursday, while the euro rallied ahead of the latest interest rate decision from the European Central Bank, which is expected to translate into on another aggressive climb.
At 08:55 AM ET, the , which tracks this coin against a basket of six other majors, is down 0.2% at 109.630, retreating from Wednesday’s high of 110.79. , a level not seen since June 2002.
The euro accounts for more than 50% of the dollar index, with the pair trading virtually unchanged at 0.9996, coming back close to parity after hitting a 20-year low at 0.9863 earlier in the week.
He will release his latest monetary policy decision at 2:15 PM ET, and it looks like he will raise rates significantly to fight runaway inflation, even as the risk of a recession in the eurozone has increased.
The debate revolves around the magnitude of the increase, and the consensus that favors a 75 basis point increase, following the example of the United States Federal Reserve, since it is considered that the central bank has a limited time to try regain control over runaway inflation before the region’s growth stalls.
ABN Amro (AS:) believes that the ECB will raise key interest rates by 75 basis points, stating that “headline inflation has continued to accelerate, while the drivers of price pressures have been generally stronger than expected.” that the ECB expected in June”.
In addition, “the GDP of the first half of this year has been higher than what the central bank expected.”
However, despite this advance in the euro, the dollar remains well supported as the US is also expected to raise rates by 75 basis points by the end of the month.
Focus will be on Federal Reserve Chairman Jerome Powell’s remarks at today’s Cato Institute conference as Fed officials will soon begin their blackout period ahead of the US central bank meeting. on September 20 and 21.
The pair is down 0.2% to the 1.1505 level, approaching the 37-year low hit at 1.1405 during the previous session, while the pair is down 0.2% to 0.6754 after it Reserve Bank of Australia Governor Philip Lowe hinted at a slowdown in the pace of rate hikes going forward.
Elsewhere, the pair is largely unchanged at 143.69, after hitting a 24-year high at 145.00 in the previous session.
The yen has been hit by its sensitivity to rising long-term US yields as traders position themselves for more Fed rate hikes, falling more than 3% in the last two sessions.