Bundesbank chief Joachim Nagel told German radio over the weekend that if the outlook for consumer prices does not change, “there must be other clear steps.” Also, ECB officials see growing risks of having to raise their benchmark interest rate to 2% or more to curb record inflation in the euro zone, sources told Reuters.
Jane Foley, head of foreign exchange strategy at Rabobank, cited the possibility of lower-than-expected US inflation data on Tuesday, also buoying stocks and drawing investors away from the safe-haven dollar. though this was probably just profit taking.
The euro’s strength was also seen against the pound as it rose to 87.22 pence on Monday, the highest since February 2021.
Sterling was up 0.8% at $1.1678, hitting its highest level this month in early London trading, with a small recovery from last week’s 37-year low.
Meanwhile, the dollar index, which measures the currency against six currencies, fell 0.67% to 108.25 from a two-decade high of 110.79 on Wednesday.
Investors are cautious ahead of the US CPI report which analysts at the Commonwealth Bank of Australia say could determine whether the Federal Reserve hikes rates by 50 basis points or 75 basis points at its meeting next week.
The dollar, meanwhile, was flat against the rate-sensitive yen at 142.66 yen, slightly below its 24-year high of 144.99 last week.
Source: Ambito
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