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Euro near one-week high before key ECB policy announcement

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The Euro climbed towards a one-week high on Thursday ahead of the European Central Bank's (ECB) policy announcement, with policymakers widely expected to leave interest rates unchanged while keeping the door open to a possible increase in September as higher energy prices risk fuelling inflation.

 

The ECB raised interest rates in June and signalled that further tightening was likely. However, a series of encouraging data on inflation, wages, economic activity, and inflation expectations in recent weeks has reduced expectations of an immediate follow-up rate hike.

 

Yet rising oil prices driven by escalating tensions in the Middle East could still prompt the ECB to tighten policy in order to prevent the energy shock from feeding into broader inflationary pressures, Reuters reports.

The Euro was trading 0.17% higher at $1.1429 at the time of writing.

 

The US Dollar index, which tracks the greenback against a basket of major currencies including the Euro and the Japanese Yen, slipped 0.13% to 100.98.

 

The Dollar has recently found support as tensions between Washington and Tehran intensified.

 

Oil prices climbed more than 1.5% during Asian trading on Thursday, reaching their highest level in more than six weeks after the United States launched a fresh wave of strikes on Iran and the Iran-backed Houthis claimed attacks on oil tankers in the Red Sea.

 

The Australian Dollar rose 0.23% against the US Dollar to $0.7012, while New Zealand's kiwi traded at $0.5818. Sterling also edged up, gaining nearly 0.1% to $1.3384.

 

Meanwhile, the Japanese Yen strengthened 0.04% against the Dollar to 163.05 per US Dollar.

 

The Yen fell to 163.23 per Dollar on Tuesday, its weakest level since December 1986, as broad-based Dollar strength and expectations that the Bank of Japan would take a gradual approach to raising interest rates weighed on the currency.

 

Japan's finance minister has repeatedly warned that authorities are prepared to intervene in the foreign exchange market if necessary, reiterating on Thursday that the government stands ready to take decisive action to curb excessive currency moves.

 

Tokyo previously stepped into the market with Yen-buying interventions in April and May after the currency weakened beyond the 160-per-Dollar level.

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Lithuania,

media contact

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.

Contact

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.