By Peter Nurse
Investing.com – The dollar has gained some buyers in early European trade on Thursday as tensions between China and the U.S. flared again overnight, but gains against the euro have been limited ahead of the European Central Bank meeting.
Kl. At 3:10 pm ET (0710 GMT), the one tracking the greenback against a basket of six other currencies was at 97.502, up 0.3%. However, the index is still down about 5% from its peak in March, as the coronavirus pandemic had caused a sprint to this safe haven.
Elsewhere, 0.1% to 109.03, 0.3% to 1.2533, and 0.2% to 1.1210.
Accommodation, U.S. administration suspended flights to its country by Chinese carriers with effect from June 16, and retaliated after China barred US carriers from entering its airspace.
The relationship between the two countries came after China’s approval of the adoption of national security legislation in Hong Kong and Macau last month.
Still, EUR / USD remains above the 1.12 level, which broke through Wednesday for the first time since mid-March.
The currency has been boosted by hopes of fiscal support measures in the European Union after Germany threw its weight last month behind the idea of an EU recovery fund breaking away from its long-standing tradition of resisting steps towards fiscal integration into the currency block.
This prompted the European Commission to propose a recovery fund of 750 billion euros, with the money split into 500 billion euros given to EU countries as grants, and the remaining 250 billion euros would be available as loans.
The European Central Bank had made much of the heavy lifting needed to support the region’s weakest economies prior to this, and is still expected to offer more grandeur later Thursday.
“I suspect the market has already priced about $ 500 billion in PEPP, and in the short term there is a risk of a correction,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.
“The market may respond positively if the ECB extends the target of its bond purchase or scraps its limit for each country. But in terms of overall size, it is hard to expect a positive surprise now,” he said.
The ECB delivers its political decision at. 1145 GMT, and ECB President Christine Lagarde will hold a news conference at 1 p.m. 1230 GMT.
Fusion Media or anyone involved with Fusion Media assumes no responsibility for any loss or damage arising from the reliance on the information, including data, offers, charts and buying / selling of signals on this site. Be fully informed about the risks and costs associated with trading in the financial markets, it is one of the most risky types of investment.