© Reuters.
By Peter Nurse
Investing.com – The US dollar loses positions at the start of trading on Monday in Europe, while the euro hits a three-week high, as traders reassess the path of the European Central Bank’s interest rates after the great last week’s rate hike.
At 09:05 AM ET, the , which tracks this currency against a basket of six other majors, is down 0.8% at 107.912, retreating from 20-year highs hit last week. at 110.79.
Last week, the European Central Bank raised its reference interest rates from 0% to 0.75%, the largest increase in its history, and its president, Christine Lagarde, has announced another two or three increases to try to keep inflation down. return to the 2% set by the bank.
This anticipation of more aggressive monetary tightening has pushed the euro higher against the dollar, with the pair advancing 1.2% to 1.0154, close to its three-week high.
“The measure announced on Thursday was a clear signal, and if the inflation picture remains the same, we should see other clear steps,” Bundesbank President Joachim Nagel said in a radio interview on Sunday.
ECB officials see a growing risk of having to raise key interest rates to 2% or more, at least another 125 basis points, to curb record eurozone inflation despite a likely recession, Reuters reported on Monday. .
The single currency has also been buoyed by news that Ukrainian troops have made major territorial gains over the weekend, raising the possibility, however remote, that Russia’s invasion of Ukraine will end.
Elsewhere, the pair is up 0.7% to the 1.1667 level, riding on the euro’s gains against the dollar, although the latest economic data indicates that the UK economy grew less than expected in July as it expanded 0.2% compared to June.
It fell 0.6% in June, a month that included two bank holidays to celebrate the late Queen Elizabeth’s 70th year on the British throne.
However, the pair is up 0.3% to 142.95, nearing last week’s 24-year high again, just below 145, and the yen remains highly sensitive to interest rate moves. interest.
The will meet next week and is expected to raise interest rates again.
Fed Governor Christopher Waller said Friday that he favors “a significant hike at our next meeting,” and St. Louis Fed President James Bullard spoke of another 75 basis point hike, which It would be the third increase of this consecutive of that magnitude.
The highly risk sensitive is up 0.5% to 0.6872 while the is flat at 6.9265 and the yuan remains low as COVID-19 lockdown measures they continue to threaten a sharp reduction in output in the world’s second largest economy.