The Euro lowered on Thursday ahead of a European Central Bank meeting. Investors expect the ECB to increase the size of its 750 billion euro ($840 billion) Pandemic Emergency Purchase Programme to boost the recovery of Europe’s weakest economies. However, some traders think this will happen not today, but at July’s meeting.
Adam Cole, the chief currency strategist at RBC Capital Markets, noted that for the Euro, the direct implications of expanding the size of the PEPP are limited. However, the implied improvement in the responsiveness of policy is positive if combined with the developing recovery fund.
On the other hand, Thu Lan Nguyen, Commerzbank’s FX and EM analyst, thinks that any further gains for the Euro could be limited by lots of positive economic news. He also stated that the most important question is whether the crisis will leave permanent damage, and if it does, then how pronounced it is going to be.
The Euro traded at $1.1202, lower by 0.3% on today’s session. Some traders argue that the European Union’s slow progress in finalizing its recovery fund implies that the ECB won’t announce more policy easing.
The central bank will release its policy decision later on Thursday. ECB President Christine Lagarde plans to hold a news conference as well.
How did the U.S. dollar fare?
The dollar rebounded on Thursday after declining over the past seven days. It surged forward by almost 0.3% against a basket of currencies. The greenback weakened in the last week as markets’ optimism about an economic recovery grew. However, the U.S. currency began strengthening again in overnight trading.
On the other hand, the safe-haven Japanese yen plunged to new two-month lows. It traded at around 0.1%, at 109.06.
Riskier currencies also declined from recent highs. The Australian dollar tumbled down as much as 0.5% against the dollar, hitting a low of $0.6884.