Euro just off 3½ month low vs US dollar

London

THE euro traded just off 3½ month lows versus the US dollar on Thursday before a potentially momentous meeting of the European Central Bank (ECB), while growth-focused currencies such as the Australian dollar gained as a global risk sell-off abated further.

The US dollar index and the yen which rose earlier this week to the highest since early-April and end-May respectively, retreated as strong earnings lifted stock markets and bond yields, and induced investors to trickle out of the safe-haven assets they had piled into.

They also bought back into cryptocurrencies, with Bitcoin rising further above the US$30,000 mark, especially after Tesla CEO Elon Musk said the company would "most likely" resume accepting Bitcoin for payment.

No new measures are anticipated from the ECB but following on from the inflation target tweak, odds have risen on policymakers promising to retain support for longer and even to add more bond buying.

The euro traded at US$1.1790 by 0800 GMT, just off the early April lows of US$1.1752 touched on July 21.

The ECB's dovish pivot at a time when many peers are mulling exiting pandemic-era stimulus is expected to keep the single currency under pressure.

The dollar index, which measures the currency against six major peers, slipped to 92.75 after pulling back from a 3½ month high of 93.194 touched on July 21.

The yen, another safe-haven, was at 130 per euro, from an almost four-month top of 128.610 hit this week, and was flat versus the dollar at 110.3 yen.

The Australian dollar changed hands at US$0.73675, from an eight-month low of US$0.72895 the previous day, despite half the Australian population being under Covid lockdowns.

It also firmed against the yen which was at 81.07, from a 51/2 month peak of 79.85.

The gains in higher-risk assets come too after robust company earnings lifted Wall Street and European bourses, allowing investors to look past concerns that the Delta Covid-19 variant would dampen the economic recovery.

Sterling firmed to US$1.374, recovering from 51/2 month troughs while in cryptocurrencies, Bitcoin held July 21's 7.9 per cent jump - the biggest since mid-June - to trade just north of US$32,000. REUTERS