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Euro edges up 0.5% against USD

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The Euro moved up on Wednesday before the central bank meeting this week, and also on reports that the EU is considering joint bond issuance to finance spending on energy and defence.


After dropping to a 22-month low on Monday to $1.0806, the single currency edged up 0.5% to $1.0946 on Wednesday, Reuters reports.


In addition, the Pound rose 0.3% against the Dollar to $1.3134.


"European currencies have been under heavy pressures for the past couple of weeks and some of these valuations have begun to look stretched," according to Jane Foley, head of FX Strategy at Rabobank in London.


"Yesterday’s news that the EU is considering issuing debt to finance energy and defence spending underpinned the Euro and helped trigger the better tone in Euro and European currencies," she went on to say.


However, analysts said the Euro will unlikely increase too much whilst the Ukraine crisis is ongoing.


Elsewhere, other European currencies including the Hungarian Forint and Polish Zloty rallied from all-time lows against the Euro, both finding support by steep interest hikes on Tuesday by the country’s central banks.


The European Central Bank is scheduled to meet on Thursday. However, as a result of stagflation, money markets forecast policymakers may postpone rate hikes until later this year.


In addition, the U.S. Dollar index – measuring the greenback against a basket of currencies including the Euro – fell 0.35% to 98.764, just under a 22-month high hit on Monday.


Forecasts of a rate hike by the U.S. Federal Reserve coupled with safe haven demand indicated that the Dollar will unlikely lose too much ground.


However, commodity currencies like the Aussie and New Zealand Dollar fell from recent highs due to war-fuelled increases in energy, metal and grains which could impact demand in the long-term.


"Market participants may switch their view from 'buy Australian Dollars because commodity prices are high' to 'sell Australian Dollars because very high commodity prices will cause demand destruction," said Commonwealth Bank of Australia strategist Carol Kong.

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About

deVere Group – Foreign Exchange’s Public Relations Department deals with all areas of the media and external communications including international, national, regional, local, trade, consumer, print, broadcast, social and online. The Department aims to provide a helpful service to journalists, broadcasters and editors, amongst others, and reply to all media enquiries, including urgent enquiries out of hours, within agreed deadlines.

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Our press office does not have access to client details and will not be able to assist with individual client enquiries. Please contact deVere Group – Foreign Exchange’s Head of Public Relations on [email protected] or call +44 2071220925.