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The
ECB is widely expected to follow its global peers by raising
interest rates in July to check soaring inflation though
economists are divided on the magnitude of the rate hike to
protect a struggling economic recovery due to high oil prices.
Oil prices are up 10% in barely a week on supply constraint
concerns with Brent crude holding above $117, pushing the
Canadian dollar and the Australian dollar up 0.3% and 0.4%
respectively. [O/R]
"Oil is helping the Norwegian crown and the Canadian dollar to
outperform and the euro is again running into resistance at the
1.06 level," said Kenneth Broux, an FX strategist at Societe
Generale in London.
The euro held below $1.06 after the ECB's Lagarde said the
central bank would move gradually but with the option to act
decisively on any deterioration in medium-term inflation,
especially if there were signs of a de-anchoring of inflation
expectations.
Money markets are pricing in about 238 basis points (bps) of
cumulative rate hikes by mid-2023 compared to around 280 bps two
weeks ago.
Broader currency market moves were contained in a big week for
markets in economic data terms. German inflation figures are due
on Wednesday, French data on Thursday and euro zone numbers on
Friday.
At the other end of the dial, higher oil prices caused the
partially convertible Indian rupee to open at a record low, and
fall further to 78.67 per dollar.
The U.S. dollar index struck a two-decade high of 105.79 this
month and was last steady at 103.93.
Elsewhere, the offshore Chinese yuan moved higher after China
reduced COVID quarantine for international travellers.
(Reporting by Saikat Chatterjee; editing by Jason Neely and
Chizu Nomiyama)
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