Rumors swirling that the European Central Bank (ECB) will consider a 50 basis point interest rate hike have driven the euro to a two -week high in the European session.
Most recently, Reuters reported that ECB policymakers will discuss whether to raise rates by half a basis point larger than expected at a policy meeting this Thursday.
Citing statements from two sources with direct knowledge of the matter, policymakers are also said to have accepted an agreement to provide assistance for indebted countries like Italy in the bond market.
Following the report, the euro jumped about 1% to 1.0253 against the US dollar.
While European bond yields bounced higher, with two -year German yields rising 5 basis points to 0.56%.
Turning to the king of the USD, the dollar index slipped lower against most major currencies at 106.73.
Despite trading positive in early trade, the giant’s holdings re -released as investors continued to lower expectations for the Federal Reserve (Fed) to make a larger rate hike of 100 basis points at next week’s meeting.
Meanwhile, the pound also took advantage of the depreciation of the USD to rebound and was also supported by improved UK employment data in May.
On the other hand, the Aussie dollar and kiwi also advanced higher with Aussie trading supported by the Reserve Bank of Australia’s (RBA) hawkish statement in its meeting minutes to take steps to raise rates further to fight inflation.
