Image: Reuters Berita 24 English - As investors prepared for the European Central Bank's first interest rate increase since 2011 and th...
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| Image: Reuters |
Berita 24 English - As investors prepared for the European Central Bank's first interest rate increase since 2011 and the expected reopening of a crucial Russian gas pipeline later in the day, the euro recovered on Thursday, moving back near a two-week high against the dollar.
The yen, however, ignored the Bank of Japan's anticipated decision to maintain its ultra-accommodative policy settings.
The euro increased by 0.3 percent to $1.02095, recovering some of its 0.39 percent loss from Wednesday, when it also reached an intraday high of $1.0273, its highest level since July 6.
A Reuters story that a crucial Russian gas pipeline would reopen on schedule after a 10-day maintenance closure and hopes that the ECB might deliver a significant 50 basis-point rate hike contributed to the euro's three sessions of solid gains this week.
Following President Vladimir Putin's warning that Russian supplies transported to Europe via the largest pipeline could be further decreased or perhaps cease, the European Union ordered its members to restrict their gas usage by 15% until March as a precaution.
Markets are divided over whether the ECB would attempt to rein in runaway inflation by delivering a previously anticipated 25 basis-point boost or a half-point increase. The monetary authority is also set to reveal additional information about a new instrument designed to curb excessive increases in bond yields in peripheral Europe.
The impending fall of the Italian government has made the situation for the area more challenging.
According to National Australia Bank, the ECB meeting will have mixed effects on the euro.
According to Rodrigo Catril, currency strategist at NAB, "Italy's political uncertainty complicates the ECB intentions to disclose specifics on its new anti-fragmentation weapon, notably regarding the requirements for the tool to be triggered," and a lack of clarity is likely to hurt the euro.
The Bank is attempting to front-load rate hikes in order to avoid weaker conditions later in 2022 and into 2023, when capacity for movement may be more constrained, Catril said. At the same time, NAB anticipates a half-point boost and guidance for another half-point increase in September.
The Japanese central bank maintained stimulus levels while increasing its inflation outlook, defying the global trend toward monetary tightening.
The dollar edged back toward the 24-year high of 139.38 yen achieved one week ago as it increased 0.05 percent to 138.34 yen.
As the number of contenders for the position of British prime minister decreased to two, the pound continued to hold below $1.20, last trading little changed at $1.1984. However, the winner is not anticipated to be named until September 5.
The New Zealand dollar fell 0.1 percent to $0.6224, while the Australian dollar increased 0.8% to $0.6895.
