Euro banknotes with different values.
Jens Büttner | image alliance via Getty Images
The euro held close to several months highs against rival majors on Thursday, with the expectation that the European Central Bank will expand its bond buying program later in the day to strengthen the coronavirus-affected economy.
The strength of the euro helped push the dollar’s index against a basket of key currencies to the lowest level in almost three months.
The euro stood at $ 1.12305 as it rose to $ 1.1258 on Wednesday, its highest levels since mid-March and the seven straight ascent session.
Against the Japanese yen, the common currency rose to a 4-1 / 2-month high of 122,625 overnight and stood at 122.41 yen last.
It also fetched 1,0798 francs on the Swiss currency in the safe harbor, and had risen to as high as 1.0820, its strongest since Jan. 14th
The European Central Bank is widely expected to increase its $ 750 billion ($ 669 billion) Pandemic Emergency BuyProgram (PEPP) by Thursday.
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.
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.
It has largely supported the euro rise against the dollar in seven straight sessions until Wednesday, after rising 2.3% during this period.
“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 dollar index stood at 97,340, having fallen by about 1% so far this week, as a broad improvement in risk sentiment, supported by global reopening, reduced the greenback cap.
On Wednesday, data showed that the U.S. private wages fell less than expected in May, suggesting layoffs ceased as businesses reopen, though the overall economy’s recovery following the Covid-19 pandemic will be slow.
Predictably, the yen in safe harbor also weakened for much of this period, trading last at 108.96 yen, near a two-month low of 108.98 hit in the former U.S. Act.
Sterling changed hands to $ 1.2576, near the highest level in over a month, aided by signs that the UK might be willing to compromise on setting points in Brexit negotiations with the European Union.
The UK is expected to indicate flexibility in relation to fisheries and trade rules if the European Union accepts to learn its regulatory adaptation and fisheries requirements, the Times reported on Tuesday as a new round of talks starts.
The UK has until July 1 to request an extension of the current transitional period ending in December.