By Rae Wee
SINGAPORE, Feb 3 (Reuters) - The euro and sterling
slipped against the dollar on Friday as markets took a dovish
cue from policymakers at the European Central Bank and the Bank
of England, who said inflationary pressures in their economies
have become more manageable.
Elsewhere, the greenback broadly advanced on the back of its
Atlantic counterparts' decline, reversing its losses earlier in
the week.
The pound slid 0.15% to a more than two-week low of
$1.2206 in early Asia trade, after falling 1.2% in the previous
session, its largest daily decline in a month.
The euro was last 0.16% lower at $1.0893, after
tumbling 0.7% on Thursday to move further away from its 10-month
peak of $1.1034.
On Thursday, the ECB and BoE each raised interest rates by
50 basis points as expected, with the latter signalling the tide
was turning in its battle against high inflation.
While the ECB explicitly alluded to at least one more hike
of the same magnitude next month and reaffirmed its commitment
in battling high inflation, President Christine Lagarde
acknowledged the euro zone outlook had become less worrisome for
growth and inflation.
"The ECB was a little bit more dovish than markets had
previously expected ... (while) the Bank of England has given a
small hint that they might be close to finishing their
tightening cycle," said Carol Kong, a currency strategist at
Commonwealth Bank of Australia (CBA).
Remarks from the ECB and the BoE came a day after Federal
Reserve Chair Jerome Powell similarly said in a news conference
following the Fed's 25bp rate hike that the "disinflationary"
process in the United States appeared to be underway.
The dollar on Friday recovered from a heavy selloff in the
aftermath of Powell's speech, and against a basket of
currencies, the U.S. dollar index rose 0.03% to 101.82,
away from Wednesday's nine-month low of 100.80.
Friday's nonfarm payrolls report will be the next major test
of the Fed's fight against inflation. Signs are still pointing
to a tight labour market, with the number of Americans filing
new claims for unemployment benefits dropping to a nine-month
low last week.
In other currencies, the Aussie fell 0.11% to
$0.7068, having lost 0.86% on Thursday, while the kiwi was little changed at $0.6475.
The comments from policymakers following a slew of central
bank meetings this week have markets seizing on signs that
interest rates could be close to peaking in most major
economies.
"We're starting to see central banks converging to a pattern
now ... the major central banks are definitely approaching the
end of their tightening cycles," said CBA's Kong.
An imminent peak in U.S. rates has provided some relief for
the Japanese yen , which last year crumbled under
pressure from rising interest rate differentials against Japan's
low interest rate environment.
The yen was last marginally higher at 128.66 per dollar and
was headed for a weekly gain of nearly 1%, reversing two
straight weeks of decline.
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(Reporting by Rae Wee; Editing by Lincoln Feast.)
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