News: FOREX-Euro climbs as ECB eyes rate hikes, dollar slides

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    • ECB's Lagarde says negative rates to end soon
    • Dollar drops across the board, follows selloff last week
    • Swiss franc gains on hawkish comments
    • Aussie rises though reaction to election results muted

    (Updates prices after U.S. open, changes dateline from LONDON)

    The dollar index fell on Monday while the euro rallied after the European Central Bank indicated a move from negative interest rates, and riskier currencies gained ground along with equities.

    ECB President Christine Lagarde said in a blog post that the bank was likely to lift the euro area deposit rate out of negative territory by the end of September and could raise it further if it saw inflation stabilising at 2%.

    After declining last week, U.S. equities followed European stocks higher on Monday.

    The euro's rally came as the dollar fell broadly, with a selloff that began accelerating last week.

    Investors had more appetite for riskier assets on Monday as they reacted to Lagarde's comments and easing worries that a European recession was imminent while the U.S. outlook looked less inspiring, according to Erik Nelson, macro strategist at Wells Fargo, New York.

    "We're seeing more optimism around global growth - European growth, Chinese growth, UK growth, and a little bit less optimism about U.S. growth. So the growth divergence theme is really a big thing and moving out of favor for the dollar," he said.

    The euro was the big gainer, last up 0.92% at $1.0666 EUR=EBS , having risen as much as 3.3% from its multi-year intraday low of $1.0349 on May 13.

    The U.S. dollar index =USD , up about 16% to a two-decade high to 105.01 over the 12 months to the middle of May, was last down 0.73% on Monday at 102.19.

    Last week speculators' net long positioning on the U.S. dollar slipped, after hitting their highest level since late November in the previous week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday.

    The U.S. dollar has soared this year but with expectations for repeated Federal Reserve interest rate hikes priced in, Wells Fargo's Nelson said it may trade sideways for some time.

    "The Fed will have a hard time becoming incrementally more hawkish," he said.

    The Australian dollar, which initially showed a muted reaction to the victory for the centre-left Labor Party in national elections at the weekend, was up 0.89% at $0.7113 AUD=D3 .

    CHINA BOOST Meanwhile the Swiss franc was gaining against the dollar after Swiss National Bank governing board member Andrea Maechler said in an interview published on Monday that the bank will tighten monetary policy if inflation in Switzerland remains persistently high. The dollar was last down 0.96% against the Swiss franc after hitting its lowest level since late April.

    Sentiment around China also helped riskier currencies. Shanghai is edging out of lockdown, and an unexpectedly big rate cut in China last week reassured investors. Also China will broaden its tax credit rebates, postpone social security payments and loan repayments, roll out new investment projects and take other steps to support the economy, state television quoted the Cabinet as saying on Monday.

    The yuan had its best week since late 2020 last week and in offshore markets on Monday firmed to 6.6542 per dollar CNH=EBS , its strongest since early May.

    Geopolitics are also in focus in Asia this week as U.S. President Joe Biden tours the region.

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    	Currency bid prices at 10:33AM (1433 GMT) 
    
     Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	   High Bid	Low Bid 
    											  Previous				   Change					
    											  Session											  
     Dollar index	  =USD	   102.1900	   102.9500	-0.73%		 6.823%		+102.9500   +102.0700 
     Euro/Dollar	   EUR=EBS	$1.0666		$1.0569	 +0.92%		 -6.18%		+$1.0687	+$1.0559 
     Dollar/Yen		JPY=EBS	127.5950	   127.9200	-0.25%		 +10.84%	   +128.0550   +127.1600 
     Euro/Yen		  EURJPY=	136.08		 135.03	  +0.78%		 +4.42%		+136.3000   +134.6700 
     Dollar/Swiss	  CHF=EBS	0.9650		 0.9743	  -0.96%		 +5.78%		+0.9751	 +0.9629 
     Sterling/Dollar   GBP=D3	 $1.2569		$1.2496	 +0.62%		 -7.04%		+$1.2601	+$1.2482 
     Dollar/Canadian   CAD=D3	 1.2775		 1.2846	  -0.55%		 +1.04%		+1.2842	 +1.2772 
     Aussie/Dollar	 AUD=D3	 $0.7113		$0.7052	 +0.89%		 -2.12%		+$0.7127	+$0.7046 
     Euro/Swiss		EURCHF=	1.0291		 1.0289	  +0.02%		 -0.75%		+1.0335	 +1.0266 
     Euro/Sterling	 EURGBP=	0.8484		 0.8457	  +0.32%		 +1.00%		+0.8495	 +0.8434 
     NZ				NZD=D3	 $0.6468		$0.6410	 +1.01%		 -5.41%		+$0.6491	+$0.6400 
     Dollar/Dollar																					 
    
     Dollar/Norway	 NOK=D3	 9.6100		 9.7400	  -1.31%		 +9.11%		+9.7330	 +9.5965 
     Euro/Norway	   EURNOK=	10.2550		10.2923	 -0.36%		 +2.42%		+10.3123	+10.2207 
     Dollar/Sweden	 SEK=	   9.8284		 9.9285	  -0.14%		 +8.99%		+9.9711	 +9.8115 
     Euro/Sweden	   EURSEK=	10.4840		10.4983	 -0.14%		 +2.44%		+10.5190	+10.4595 
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    World FX rates	https://tmsnrt.rs/2RBWI5E 
    

    FX market positions https://tmsnrt.rs/3wL8Yqa

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