Euro Little Changed As Traders Await ECB Meeting

The euro edged up on Thursday ahead of the European Central Bank meeting expected to outline a clearer schedule for unwinding stimulus, opening up the possibility of a first rate hike later this year.

After touching its lowest since early March on Wednesday, the euro EUR= was 0.1% higher at $1.09030 at 1120 GMT, ahead of the meeting. The ECB is expected to give some clues on its coming policy amid record-high inflation and fears of a war-related recession. (Full Story)

Antje Praefcke, FX analyst at Commerzbank, said the market will not have a strong preference for the euro over the dollar until there is more clarity about whether the key rate will be raised in the fourth quarter.

"I think the market will want to wait and see how the Ukraine conflict and the energy sanctions develop," she said.

Citi FX analysts said previous speeches and the minutes suggested that "while gradualism is still in favour, growth concerns remain limited and hawkish surprises cannot be ruled out".

In the meantime, the dollar index, which measures the greenback against six peers, was down 0.1% at 99.670, after touching its highest since May 2020 of 100.520 on Wednesday, supported by a surge in Treasury yields this week.

But the benchmark 10-year Treasury yield US10YT=RR rally paused, after rising to a December 2018 high, as U.S. inflation data this week, while high, was not as bad as some had feared. (Full Story)

The battered yen JPY= had some respite, making a small recovery from a 20-year low hit against the dollar.

More than three-quarters of Japanese firms say the yen has declined to the point of being detrimental to their business, a Reuters poll found. (Full Story)

The British pound GBP=D3 rose to a nine-day high versus the dollar. It was last up 0.1% at $1.3132. GBP/

The Swedish crown SEK=D3 traded 0.5% higher at 9.4420, after surging to an eight-day high against the dollar as Sweden's inflation data came in stronger than expected, bolstering expectations for a Riksbank rate hike sooner rather than later.

The bank had indicated in February it planned to keep rates at 0% until 2024, which many now said was unrealistic. (Full Story)

Other central banks tightened monetary policy, reinforcing expectations of higher interest rates globally.

The Bank of Korea surprised markets with a rate hike, while the Monetary Authority of Singapore also tightened policy, sending the Singapore dollar SGD= to its highest since February. (Full Story) (Full Story)

On Wednesday, the Bank of Canada and Reserve Bank of New Zealand both raised rates by 50 basis points, the largest hike for each in around 20 years. FRX/