Dollar up, euro down as Lagarde keeps July policy options open



By Saikat Chatterjee and Hannah Lang

LONDON/WASHINGTON, June 28 (Reuters) - The dollar climbed on Tuesday and the euro held below $1.06 as European Central Bank (ECB) President Christine Lagarde offered no fresh insight into the central bank's policy outlook.

The ECB is widely expected to follow its global peers by raising interest rates in July to try to check soaring inflation though economists are divided on the magnitude of any rate hike.

The euro held below $1.06 after Lagarde said the central bank would move gradually but with the option to act decisively on any deterioration in medium-term inflation, especially if there were signs of a de-anchoring of inflation expectations.

"The ECB is in a tough spot because it is expected to see more significant slowing than a lot of its peers," said Mazen Issa, senior FX strategist at TD Securities in New York.

"There's an inherent limitation to how much the ECB is going to be able to do, particularly in the relative sense to, say, the Fed," he added, pointing to the ongoing war in Ukraine and the fragmentation risk in the euro zone.

Money markets are pricing in about 238 basis points (bps) of cumulative rate hikes by mid-2023 compared to the around 280 bps they anticipated two weeks ago.

The U.S. dollar index =USD , which struck a two-decade high of 105.79 this month, was last up 0.462% at 104.440.

New York Federal Reserve Bank President John Williams on Tuesday in an interview on CNBC said interest rates "definitely" needed to be between 3% and 3.5% by the end of this year, but that he did not anticipate a U.S. recession.

Elsewhere, a rise in oil prices LCOc1 pushed the Canadian dollar CAD=D3 and the Australian dollar AUD=D3 up 0.21% and 0.13% respectively. Oil prices have risen 10% in barely a week on supply constraint concerns with Brent crude holding just below $117.

"Oil is helping the Norwegian crown and the Canadian dollar to outperform and the euro is again running into resistance at the 1.06 level," Kenneth Broux, an FX strategist at Societe Generale in London, said.

The offshore Chinese yuan CNH=EBS moved higher after China reduced COVID quarantine for international travellers.

In crytocurrencies, bitcoin BTC= last rose 0.28% to $20,956.91. It fell to as low as $17,588.88 earlier this month.

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Currency bid prices at 10:06AM (1406 GMT) Description

RIC

Last

U.S. Close Pct Change

YTD Pct

High Bid

Low Bid

Previous

Change

Session

Dollar index

=USD

104.4300

103.9700

+0.45%

9.164%

+104.4600 +103.7500 Euro/Dollar

EUR=EBS

$1.0520

$1.0583

-0.59%

-7.46%

+$1.0606

+$1.0519 Dollar/Yen

JPY=EBS

136.1500

135.4800

+0.51%

+18.29%

+136.3150 +135.1200 Euro/Yen

EURJPY=

143.23

143.35

-0.08%

+9.91%

+144.2700 +142.8700 Dollar/Swiss

CHF=EBS

0.9575

0.9562

+0.16%

+4.99%

+0.9586

+0.9535 Sterling/Dollar GBP=D3

$1.2207

$1.2265

-0.44%

-9.71%

+$1.2291

+$1.2206 Dollar/Canadian CAD=D3

1.2851

1.2872

-0.16%

+1.65%

+1.2878

+1.2820 Aussie/Dollar

AUD=D3

$0.6933

$0.6925

+0.15%

-4.59%

+$0.6965

+$0.6916 Euro/Swiss

EURCHF=

1.0072

1.0121

-0.48%

-2.85%

+1.0131

+1.0074 Euro/Sterling

EURGBP=

0.8617

0.8626

-0.10%

+2.58%

+0.8646

+0.8613 NZ

NZD=D3

$0.6266

$0.6302

-0.50%

-8.39%

+$0.6313

+$0.6268 Dollar/Dollar

Dollar/Norway

NOK=D3

9.8085

9.7985

-0.03%

+11.19%

+9.8160

+9.7425 Euro/Norway

EURNOK=

10.3217

10.3608

-0.38%

+3.08%

+10.3777

+10.3090 Dollar/Sweden

SEK=

10.1223

10.0692

-0.12%

+12.25%

+10.1230

+10.0390 Euro/Sweden

EURSEK=

10.6502

10.6631

-0.12%

+4.07%

+10.6812

+10.6341



World FX rates Link
King dollar G10 FX Link



Reporting by Saikat Chatterjee in London and Hannah Lang in
Washington; editing by Jason Neely, Chizu Nomiyama and Barbara
Lewis

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