Investing.com – The US dollar was steady in early European trading on Thursday, while the euro gained ahead of the European Central Bank’s latest policy-setting meeting.
At 04:00 ET (09:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, rose marginally to 104.265.
Dollar on the back foot
The dollar held steady on Thursday but has been largely muted this week, partly pressured by the benchmark sliding to a two-month low as easing labor market conditions in the United States undermine the case for Fed rate cuts. further strengthened over the years. .
Data released on Wednesday showed the increase in May was slower than expected, reflecting weak pressure the day before.
There’s more labor market data to study later Thursday, in the form of the weekly, ahead of Friday’s much-anticipated monthly.
Markets have priced in nearly 50 basis points of Fed rate cuts this year, the first of which are expected to come in September.
ECB plans to cut interest rates
However, the main event of the day will take place in Europe, where interest rates will be cut for the first time since 2019, buoyed by signals that inflation in the eurozone currency area is easing towards the ECB’s 2% target.
The central bank is widely expected to cut deposit rates from a record 4.0% to 3.75%, with consumer prices falling from more than 10% at the end of 2022 to just above the central bank’s target of 2%.
That said, recent data shows that prices have risen, bringing ECB President Christine Lagarde’s accompanying press conference into sharp focus as the market looks for clues about future policy moves.
“Risks for the euro appear somewhat to the upside today, but we doubt this will be a huge event for the currency market,” ING analysts said in a note. “Unless President Lagarde renews some of her eloquence (she has apparently deliberately made press conferences boring), then the FX market may be left with more questions than answers.”
traded 0.1% higher at 1.0873 and fell 0.1% to 1.2780, with both pairs seeing tight trading ranges ahead of the ECB meeting.
BOJ meeting looms
In Asia, it traded 0.1% higher at 156.31, but remained well below recent highs.
This will meet next week and is expected to possibly tighten the policy. BOJ Governor Kazuo Ueda said earlier Thursday that it would be appropriate to reduce bond purchases by the central bank as it moves toward an exit from massive monetary stimulus.
traded mostly flat at 7.2474, holding close to May’s six-month high, after sentiment toward China deteriorated in recent sessions as traders waited for more signals on the country’s plans to support economic growth.
