Euro close to three-week high, however looming Fed tightening may assist greenback


HONG KONG: The euro was close to Friday’s three-week excessive on Monday morning, after the European Central Bank‘s hawkish flip final week, however analysts stated additional short-term positive factors seemed much less possible with looming Fed tightening supporting the dollar.

In the meantime, in cryptocurrency markets, Bitcoin held round a two week excessive.

Investors this week can be anticipating U.S. inflation knowledge due Thursday, with a robust studying cementing expectations that the Fed will elevate charges at its March assembly and trace at the potential of a big 50 foundation level rise.

The euro was final at $1.1451, not removed from Friday’s excessive of $1.4183, equalling mid-January’s high.

The yen was at 115.16 per greenback, and sterling was at $1.35310, each in the midst of their current ranges.

This left the greenback index at 95.461, having been given a late enhance by sturdy U.S. jobs knowledge Friday on the finish of a bruising week for the dollar.

It additionally may achieve additional within the brief time period.

“We see the chance of extra USD upside within the near-term if rate of interest markets worth a better probability of a 50bp hike in March. However final week’s hawkish flip by ECB President Christine Lagarde suggests any upside within the USD can be capped,” stated Joe Capurso, head of worldwide economics at Commonwealth Financial institution of Australia, in a morning observe.

Within the brief time period he added “with little contemporary data from Europe possible this week to additional enhance market pricing for ECB hikes, materials additional upside to EUR is unlikely.”

Markets moved to cost in a one-in-three probability the Fed may hike by a full 50 foundation factors in March following sturdy U.S. jobs knowledge Friday, and suggesting there’s a cheap probability charges will attain 1.5% by yr finish.

This pushed U.S. two-year yields larger, and on Monday morning they had been holding agency round a two-year excessive at 1.32%.

Benchmark 10-year yields additionally held onto Friday’s positive factors and had been at 1.9049%.

This week there are additionally speeches by coverage markers on the Fed and the British, European, Australian and Canadian central banks.

Klaas Knot, the Dutch Central Financial institution president and one of many extra hawkish members of the ECB’s governing council, stated on Sunday he expects a hike within the fourth quarter of this yr.

Bitcoin was buying and selling at round $41,800, having jumped 11% late on Friday.

The Australian greenback was on the again foot at $0.7071, with the Reserve Financial institution of Australia trying to be on the extra dovish finish of the central financial institution spectrum.

The Aussie can be weak in opposition to different currencies, and on Friday touched its lowest since September versus the euro.

(Reporting by Alun John; Modifying by Stephen Coates)

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