By Peter Nurse
Investing.com: The US dollar stabilized in European trading on Thursday after overnight losses. However, the euro surged above parity ahead a likely jumbo hike by European Central Bank.
At 03:00 ET (07:00 GMT),, which tracks greenback against a basket six other currencies, increased 0.2% to 109.745, having previously fallen to 109.373, its lowest point in over a month.
The dollar has fallen below its previous highs amid rising expectations that the US would soon shift to less aggressive rate hikes following a 75-basis point increase next week.
This follows Wednesday’s release data on weak housing data. Data released Wednesday showed a drop of over 10% in September.
Analysts at ING stated in a note that although it should be obvious that the Fed is targeting the housing sector, it is important to see other sectors slow down in order for the Fed to conclude that aggregate demand has not been affected by supply constraints.
Markets expect a 75 bp rate rise from the.
However, the forward-looking fell 0.2% to 1.0557, despite a slight increase to -41.9 (in November) from a downwardly revised -42.8 in Oct.
“It’s too early to predict a trend change at the moment. Rolf Buerkl, GfK’s consumer expert, stated that consumer sentiment remains extremely volatile.
The pair is above parity, however, as the ECB plans to raise its main rate to the highest it has been in more than a decade in an effort to curb record inflation.
The stock fell 0.3%, to 1.1591, after it had fallen from its highest since Sept. 13, when traders reacted positively towards a degree of political stability under new Prime Minister Rishi Sunderak. Jeremy Hunt remains as Chancellor.
“The UK’s sovereign default swap has now returned to pre-‘fiscal event’ levels while gilt-bund spreads have now returned to the 150bp levels seen early September,” said ING.
The yen gained against the dollar, trading 0.5% lower at 140.64 It’s not clear how long this can continue, as it is widely expected that the Fed will keep rates at their ultra-low levels at Friday’s meeting.
The Chinese stock market fell 0.1% to 0.6489, rose 0.2% at 0.5845, and rose 0.6% up to 7.2152 as data showed that China’s stock market sank for the third consecutive September.