The Euro market strengthened to a one -week high on Monday showing a string of encouraging performance from the weakening US dollar after some Federal Reserve officials signaled that they were less willing to raise interest rate hikes.
The comments were made late last week leading to a massive sell-off of the U.S. dollar and a final fall from a two-decade high. In addition it also pushed up global stocks and non -US dollar currencies, especially the euro. Also helping sentiment were stimulus support signals from China.
The US dollar index, which measures the US dollar against six major currencies, traded down 0.6% to 107.282. The euro strengthened 0.53% to a trading level of 1.0140 against the US dollar.
According to Derek Halpenny, head of research at MUFG, ‘equity markets are still in positive territory, risk appetite is back on the rise after comments from Fed governor (Christopher) Waller that a 100 -point hike has high risks”.
Waller and St. Louis Fed Governor James Bullard said they would prefer a 75 basis point interest rate hike at the Fed meeting on July 26-27, rather than a 100 basis point move made by some parties following the above-predicted inflation readings.
The European Central Bank is expected to raise rates by 25 basis points on Thursday and investors are waiting to see if it outlines plans to address rising bond yields in southern European bloc countries especially Italy.
On the same day, Russia will resume gas supplies through the Nord Stream pipeline after a 10 -day maintenance shutdown and failure to do so will scare the market.
In Italy, investors are watching to see the fate of Prime Minister Mario Draghi who will speak in parliament this week after his resignation was rejected by the country’s president.
Meanwhile, other central banks increased the rate hike, with Canada making a 100 basis point increase last week. New Zealand’s three -decade high inflation surge on Monday sparked speculation about a larger 75 basis point hike.
This has pushed the kiwi currency to a 10 -day high against the US $ 0.62, up 0.4%. The Australian dollar hit a week -long high, up 0.7%.
