The dollar edged higher in early European trading Friday, rebounding a touch after falling to a one-month low against the euro in the wake of Thursday’s European Central Bank meeting.
At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher at 93.438, just above Thursday's low at 93.277 - a level not seen since Sept. 27.
It’s the EUR/USD pair which has seen most of the action of late, falling 0.1% to 1.1665 after rising as high as 1.1692 overnight for the first time since Sept. 28.
This follows Thursday’s ECB meeting, which resulted in the central bank leaving interest rates and asset purchases unchanged, as expected. However, the focus was on Christine Lagarde, with the ECB governor suggesting the inflation will be higher for longer, prompting traders to bet on the central bank being quicker in reining in its accommodative monetary policy.
“The ECB still sees the period of higher inflation as transitory but has become much more balanced with its inflation analysis, paving the way for further asset purchase reductions in December,” said analysts at ING, in a note.
Traders will have their eyes on economic numbers from both regions later in the day, with Europe seeing a preliminary reading of the consumer price index, while the U.S. gets personal spending and income data.
Looking ahead, the Federal Reserve and the Bank of England are scheduled to hand down their policy decisions in the following week. The Fed is expected to begin asset tapering from this meeting, while the BOE is expected to announce an interest rate hike.