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After touching a 22-month low on Monday of $1.0806, the euro
stood at $1.0968 at 1220 GMT, up 0.7% on the day, after a report
citing unnamed officials said the EU was discussing joint bond
issuance.
European currencies such as Poland's zloty and Hungary's forint
rose sharply, rebounding from record lows against the euro, also
supported by both central banks hiking rates on Tuesday.
The ECB meets on Thursday but amid the spectre of stagflation,
money markets expect policymakers to delay rate hikes until late
in the year. [IRPR]
"European currencies have been under heavy pressure for the past
couple of weeks and some of these valuations have begun to look
stretched," said Jane Foley, head of FX Strategy at Rabobank in
London.
"News that the EU is considering issuing debt to finance energy
and defence spending underpinned the euro and helped trigger the
better tone in the euro and European currencies," she added.
Sterling rose 0.4% against the dollar to $1.3148, Poland's zloty
jumped 1.8% against the greenback to 4.3808 and Hungary's forint
surged 2.8% to 345.80.
Analysts said the euro is unlikely to make much headway while
there is so much worry about the war in Ukraine spreading, while
expectations for a Federal Reserve rate hike and safe haven
demand suggested the U.S. dollar would be unlikely to give up
too much ground.
Against a basket of currencies including the euro, the dollar
fell 0.5% to 98.628, to sit just below a 22-month peak touched
on Monday.
"While the uncertainty surrounding the military conflict but
also energy prices remains high, the volatility on the FX market
is unlikely to ease either, leaving the U.S. dollar with the
advantage as a safe haven," said Antje Praefcke, FX Analyst at
Commerzbank.
In the meantime, commodity prices are expected to drive FX
trading with oil climbing again after the U.S. said it would ban
Russian oil imports. [MKTS/GLOB]
The Norwegian crown rose 0.6% versus the dollar to 8.9235, the
Brazilian real surged 0.6% to 5.0300 and the Canadian dollar was
up 0.45% at 1.2833.
Cryptocurrencies also rose on speculation the White House may
soften its combative approach to digital assets. Bitcoin was
last up 10% at $42,330 and ether was up 7% at $2,760.
(Reporting by Joice Alves; Editing by Kirsten Donovan)
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