© Reuters. FILE PHOTO: US dollar and euro banknotes are shown in this illustration taken on July 17, 2022. REUTERS/Dado Rovik/Illustration
By Tom Westbrook
SINGAPORE (Reuters) – The dollar slowed and the euro rose on Tuesday, as concerns from regional banks led traders to anticipate cuts in US interest rates before long, while a 50 basis point rate hike in Europe remains a straightforward option at the central bank next week. interview.
The euro rose above $1.10 overnight and was still trading at $1.1062 in the early Asian session. Trade eased due to holidays in Australia and New Zealand and ahead of central bank meetings in Japan on Friday and the United States and Europe next week.
ECB Governing Council member Isabel Schnabel told Politico that a 50 basis point rate hike was not off the table and would depend on the data — particularly inflation figures due two days before the May meeting.
François Villeroy de Gallo, French policymaker at the European Central Bank, seemed to have a different view, calling for further increases to be limited in number and size in an interview with Le Figaro, but markets focused on the fact that more was still expected. of increments.
Futures pricing implies a probability of 2/3 for an ECB hike of 25 basis points and a change of 1/3 for a larger hike of 50 basis points.
“It’s not fully priced in yet, so if the ECB goes to 50, it will be supportive of the euro, and I think that’s what is reflected in the market,” said Moh Seong Sim, currency analyst at Bank of Singapore.
The euro also reached an eight-year high of 148.47 yen as the Bank of Japan’s new governor, Kazuo Ueda, indicated that he was in no rush to change policy. This week’s Bank of Japan meeting, which concludes on Friday, is its first.
According to data from electronic brokerage services going back to the early 2000s, the yen also fell to a two-decade low against the Swiss franc at 151.33 per franc.
The yen stabilized against the dollar and was last traded at 134.28 per dollar.
Overnight news about falling deposits in First Republic Bank (NYSE:) in the US served as a reminder that stability risks have not completely faded and prompted traders to renew expectations that the Fed is rapidly shifting from hiking to cutting.
Fed funds futures point to an 88% chance of a rally next week, followed by about 50 basis points of cuts by the end of the year.
The index fell 0.4% overnight and hit a ten-day low of 101.19 in early Asian trade.
The Australian dollar settled at $0.6699 as traders await CPI data due on Wednesday.
The New Zealand dollar, which has been under pressure since the release of surprisingly weak inflation figures last week, rebounded slightly overnight and settled at $0.6176 on Tuesday, just above its 200-day moving average.
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The currency bid prices are at 0134 GMT
Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid
previous change
a class
euro/dollar
$1.1062 $1.1046 +0.15% +0.00% +1.1068 +1.1045 $
dollar / yen
134.2650134.2750 -0.01% + 0.00% +134.3550 +133.9600
euro / yen
148.54 148.26 +0.19% +0.00% +148.6100 +148.0600
dollars / Swiss
0.8865 0.8876 -0.12% + 0.00% +0.8878 +0.8864
British pound / dollar
1.2501 1.2483 + 0.16% + 0.00% +1.2507 +1.2488
Canadian Dollar
1.3527 1.3541 -0.11% + 0.00% +1.3541 +1.3525
Australian/dollar
0.6699 0.6696 + 0.04% + 0.00% +0.6705 + 0.6693
NZ
USD/USD 0.6183 0.6167 +0.29% +0.00% +0.6187 +0.6169
All spots
locations in Tokyo
Spots in Europe
twists
Tokyo forex market information from Bank of Japan