Title: Euro edges up, yen languishes as all eyes on ECB meeting

Jun 09, 2022 02:34AM ET

By: AnalysisWatch

The yen fell to a fresh 20-year low against the dollar on Thursday and the euro edged higher ahead of the highly anticipated European Central Bank meeting that is expected to shed light on its monetary tightening plans.

It is all but certain that the ECB will announce an end to its long-running asset purchase programme at the end of this month and hold out the prospect of a rate hike in July, but the size and pace of the tightening are uncertain.

Speculation is growing that inflation in the euro zone could prompt the ECB to begin its rate hike campaign with a hefty 50 basis point increase.

The euro rose 0.1% to $1.072 on Thursday after moving little this week.

The ECB policy announcement is scheduled for 1145 GMT, with a press conference scheduled for 1230 GMT.

Elsewhere, the yen continued its slide, falling to a fresh 20-year low of 134.56 yen per dollar in early trade before recovering to 133.79.

It is not far from the 135.20 reached on 31 January 2002, and a breach of that level would mark the lowest since October 1998.

EURO/YEN POINT

The yen also fell against the euro amid signs of ECB rate hikes, trading at 143.78 per euro, just below Wednesday's seven-and-a-half-year low.

The BOJ is allowing Japan's benchmark 10-year bond yield to move as much as 0.25 percentage point away from its 0 percent target, and it was last at 0.249 percent.

In contrast, Germany's 10-year yield, the euro-area benchmark, rose to a fresh eight-year high of 1.368% on Wednesday, and the gap between the German and Japanese benchmarks widened to its widest in nine years on Thursday.

Sterling was steady at $1.2528 and the risk-friendly Australian dollar was slightly weaker at $0.7178, in line with lower equity markets.

The dollar index was a touch lower at 102.47.