Into Thursday’s European Central Bank Meeting, the euro softens. About hard Brexit, the Pound dumped of fresh worries. Investors weighed whether on an accommodative turn from the ECB later this week. It could hit the euro. Thus, on Tuesday, the United States dollar held on to small overnight gains. Because of the Brexit uncertainty, the Pound nursed losses.
In thin holiday trade, against a basket of currencies, the greenback had edged 0.2% higher. It rose by roughly the same margin against the euro to $1.1816.
Early in the Asian day, moves were modest. Nevertheless, it had the United States dollar back under gentle pressure. It is because risk appetite appeared to return to equity markets.
The Australian dollar rose 0.1% to $0.7280. Moreover, the New Zealand dollar lifted very slightly. Following a Sunday statement from the central bank, which again raised the prospect of negative rates, the New Zealand dollar hit lows.
European Central Bank Meeting in the attention
This week there will come by the European Central Bank’s policy decision on Thursday. Thus, the focus is on that event.
Most analysts do not forecast a change in the bank’s policy stance. Nevertheless, they are looking to the message on its inflation expectations and whether it seems concerned by the strength of the euro.
At the starting of the month, the euro marked a two-year high just above $1.10. Thus, the meeting comes after that. Comments concerning its level from European Central Bank chief economist Philip Lane knocked it lower.
Kim Mundy is the Commonwealth Bank of Australia currency analyst. He said that the European Central Bank could raise more concerns over a further appreciation in the euro. Moreover, it can make some downward revisions to its inflation projections.
Mundy said that in their view, the United States dollar could lift further over the remainder of the week. It is because of the possibility that the European Central Bank will take a sharper dovish turn.
- Trading Instrument