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The euro jumped after the European Central Bank’s governing council said it would hold an emergency meeting on Wednesday, June 15 to discuss the recent massive sell-off in government bond markets, briefly distracting traders ahead of the upcoming US Federal Reserve meeting.
The single European currency rose by as much as 0.7% against the dollar after the announcement of the meeting, which comes after the difference between the returns of Germany and the countries of the south with higher indebtedness, especially Italy, rose to its highest level in more than two years.
The Italian 10-year bond yield fell 20 basis points to 4%, from an 8-year high hit this week. It is expected to record its largest daily decline since the first of March.
The rise of the euro led to a decline in the dollar index, which measures the performance of the US currency against the major currencies, by 0.37% to 104.90 points.
The US Federal Reserve’s monetary policy meeting is scheduled for later today, and markets expect an 87% chance of a 75 basis point rate hike as policymakers try to rein in inflation.
The dollar has already made gains in the past few months thanks to the Fed’s rate hike ahead of most other major central banks, and it has also received a boost in recent weeks as investors seek safe havens fearing the economic impact of a rapid tightening of financial conditions.
This pressured the rise in US interest rates against the low Japanese yields on the yen, which recorded a new low in 24 years at 135.60 per dollar in the Asia-Pacific region.
However, it recovered during the day in Asia amid the volatility in the government bond markets, to 134.53.
The pound rose to $1.2040 after falling to a 15-month low against the dollar at $1.1934 the day before, as the prospect of a new independence referendum did not help it.
Scotland.
The Australian dollar, often seen as risk appetite, hit $0.69135, up 0.6% from a one-month low hit the day before.
The Australian dollar has fallen 7.9% since the start of the current quarter, which will be its worst quarter since the first three months of 2020 when it was hit by the Covid-19 pandemic.
As for cryptocurrencies, bitcoin fell 4.7% to $2,038. It had fallen to an 18-month low of $20715 today.
