TOKYO- The euro rebounded on Thursday, rising back toward a two-week high to the dollar, as investors braced for the European Central Bank’s first interest-rate increase since 2011 and the scheduled reopening of a key Russian gas pipeline later in the day.
Meanwhile, the yen shrugged off the Bank of Japan’s as-expected decision to stick with ultra-easy policy settings.
The euro gained 0.3 percent to $1.02095, clawing back part of a 0.39 percent retreat on Wednesday, when it also hit an intraday peak of $1.0273, the highest since July 6.
The euro had enjoyed three sessions of strong gains this week on expectations the ECB might deliver a big 50 basis-point rate hike and a Reuters report that a key Russian gas pipeline would reopen on time following a 10-day maintenance shutdown.
The European Union asked member states on Wednesday to cut gas usage by 15 percent until March as an emergency step after President Vladimir Putin warned that Russian supplies sent via the biggest pipeline to Europe could be reduced further and might even stop.
Markets are split on whether ECB policymakers will deliver a previously telegraphed 25 basis-point increase or a half-point rise to try to wrestle down runaway inflation. The monetary authority is also likely to provide more details of a new tool aimed at controlling outsized rises in bond yields on Europe’s periphery.
The outlook for the region has been further complicated by the looming collapse of the Italian government.
National Australia Bank sees the ECB meeting having mixed implications for the euro. – Reuters
