LONDON: The euro held above parity with the dollar Thursday but eurozone stocks dropped as the European Central Bank prepares to announce another big hike to interest rates in the face of sky-high inflation.
The euro on Wednesday traded above one dollar for the first time since last month as the US currency slid also against the pound and yen on data showing cracks in the world’s biggest economy.
The dollar recovered some of the lost ground, however, ahead of Thursday’s key ECB decision.
“The European Central Bank will once again have to turn a blind eye on yet more recessionary signals in the eurozone, China and elsewhere as it battles to bring inflation back under control,” noted City Index market analyst Fawad Razaqzada.
“A 75-basis point rate hike appears to be a foregone conclusion, which means the reaction of the euro and European stocks will depend on more than just the rate decision itself.”
Markets will be looking for clues on the size of future ECB rate hikes in the press conference from the bank’s head Christine Lagarde, analysts said.
European stocks notch 5-week highs on hopes central banks will pivot
After a painful year for markets hit by central bank rate hikes to fight decades-high inflation, investors have taken heart from several weak US indicators – the latest on the services and real estate sectors – suggesting the economy is slowing.
That has led to speculation officials could be ready to tap the brakes on the increases, while some Fed policymakers have also raised the possibility of a slowdown.
The optimism was boosted Wednesday by news that the Bank of Canada had raised rates less than expected and signalled it is ready to wind down.
“The downshift at the Bank of Canada has further fanned the winds of a similar move by the Fed come December and comes after the (Australian central bank) slowed the pace of hikes to 25 basis points at its October meeting,” said National Australia Bank’s Taylor Nugent.
Credit Suisse shares slide
Traders continued to digest earnings updates from the world’s biggest companies.
Shares in Credit Suisse slumped nearly 11 percent after Switzerland’s second-biggest bank announced a string of radical measures Thursday aimed at turning around the beleaguered lender.
Credit Suisse says seeks $4bn capital, Saudi National Bank to invest up to $1.5bn
Credit Suisse revealed huge third quarter losses and said it would revamp its investment banking unit, slashing 9,000 jobs and raising fresh capital.
London’s benchmark FTSE 100 stocks index climbed, boosted by strong share-price gains for energy heavyweights BP and Shell following the latter’s bumper third-quarter profits on high oil and gas prices.
Key figures around 1100 GMT
Euro/dollar: DOWN at $1.0032 from $1.0087 on Wednesday
Pound/dollar: DOWN at $1.1562 from $1.1621
Dollar/yen: DOWN at 146.32 yen from 146.39 yen
Euro/pound: DOWN at 86.74 pence from 86.77 pence
London - FTSE 100: UP 0.3 percent at 7,076.41 points
Frankfurt - DAX: DOWN 0.8 percent at 13,093.42
Paris - CAC 40: DOWN 0.8 percent at 6,229.06
EURO STOXX 50: DOWN 0.7 percent at 3,579.38
Tokyo - Nikkei 225: DOWN 0.3 percent at 27,345.24 (close)
Hong Kong - Hang Seng Index: UP 0.7 percent at 15,427.94 (close)
Shanghai - Composite: DOWN 0.6 percent at 2,982.90 (close)
New York - Dow: FLAT at 31,839.11 (close)
Brent North Sea crude: UP 0.6 percent at $96.24 per barrel
West Texas Intermediate: UP 0.6 percent at $88.41 per barrel
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