On Thursday morning, the dollar was down. The European Central Bank meeting and subsequent policy choices remained the market’s primary focus.
The US Dollar Index measures the dollar’s value against a basket of other currencies. By 12:29 p.m. ET, it went down 0.09 percent to 102.45. (4:29 AM GMT). The USD/JPY exchange rate fell 0.12% to 134.09. The yen recovered from a 20-year low in the previous session on Thursday, despite the Bank of Japan’s stimulatory policies being in place. The Australian dollar fell 0.13 percent to 0.7183, while the New Zealand dollar rose 0.08 percent to 0.6452. The USD/CNY exchange rate fell by 0.10 percent to 6.6768; meanwhile, the GBP/USD exchange rate fell by 0.04 percent to 1.2535.
ECB To Change Asset Purchase Program
According to government statistics issued earlier in the day, China’s exports climbed 16.9% year on year in May; they exceeded market forecasts as COVID-19 limits and interruptions to manufacturing and logistics eased. Forecasts from Investing.com expected an increase of 8.0 percent, whereas April saw a 3.9 percent increase. Later in the day, the ECB will announce its policy decision, which will likely halt its long-running asset purchase program. If ECB President Christine Lagarde “leans into a more hawkish interest rate move in the future,” Commonwealth Bank of Australia currency analyst Carol Kong said, the euro-dollar will benefit. “However, given that inflation is at a record high and the economic rationale for a rate hike exists, I wouldn’t rule it out completely.”
Given the high euro zero inflation, the market has priced in a 50-basis-point interest rate rise by the ECB. Investors are still concerned that interest rate rises would precipitate a recession. The Organization for Economic Cooperation and Development (OECD) cautioned on Wednesday that the conflict in Ukraine had worsened the global economic picture, lowering its growth estimates. On the statistics front, the consumer pricing index (CPI) in the United States, the CPI in China, and the producer price index (PPI) in China are all due on Friday. Bitcoin, the most popular cryptocurrency, was hovering around the $30,000 mark.