The euro looks past the BOJ’s pigeon prior to the ECB meeting


London — The euro fell below $ 1.16 as investors waited to hear policymakers’ views on the outlook for inflation and the expected backlash against rising interest rate expectations ahead of the European Central Bank meeting on Thursday. rice field.

The Australian dollar was immersed in speculation about the Reserve Bank of Australia’s tightening plans as the yen fell after the Bank of Japan remained dovish on a busy day of central bank-led activity.

Analysts may admit that inflation will be higher than expected, but hope the ECB will oppose rising expectations for next year’s rate hikes. Inflation expectations in the euro area have also skyrocketed, with one market gauge hitting a seven-year high this month.

The euro fell slightly at $ 1.1599 by 0705 GMT. The dollar index remained almost unchanged at 93.863.

“Most of the market is probably expecting some backlash against the market price of the 2022 ECB tightening. Here, there will be a 10bp rate hike in September next year. This is all a little bit. It seems obvious, and perhaps the reason the EUR / USD wasn’t sold out was that it was delivered by Lagarde, “the ING analyst said in a memo.

The Japanese yen rose slightly to 113.74 per dollar, but remained close to its four-year low.

The Bank of Japan lowered consumer inflation expectations for the year to March 2022 from 0.6% to 0%, as expected, overall take-out strengthened market bets and other central banks in crisis mode policy dialback Will lag behind.

The Australian dollar fell 0.1% to $ 0.7516 as Australian bond yields surged to their highest since mid-2019 after the central bank refused to buy government bonds at the heart of the stimulus package. 0.1% target.

Yield targets are central to the RBA case where the 0.1% cash rate does not rise until 2024, so if that cannot be maintained, the rate will probably need to rise much faster by mid-2022. Market betting will be spurred.

After a statement by the Reserve Bank of Australia, Australia initially fell 0.5%, but soon eliminated these losses.

Kim Mandy, Senior Economist and Currency Strategist at Commonwealth Bank, said: Australia.

The Bank of Canada suggested on Wednesday that it could raise interest rates in April 2022, saying inflation was above target for most of next year due to rising energy prices and supply bottlenecks.

The US dollar fell against the Canadian dollar in the news, ending at $ C1.2367, with Rooney hitting a nearly four-month high.

In cryptocurrencies, Bitcoin rose 1% to $ 59,007 and remains stable after falling from its record high of $ 67,016 on October 20th.

Tommy Wilkes

Reuters

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