Dollar slips, euro gains ahead of ECB announcement

NEW YORK  (June 9) - The dollar slipped against a basket of major currencies for a second straight day on Wednesday but still managed to hit a fresh 20-year high against the yen, while the euro strengthened ahead of a policy announcement by the European Central Bank.

The yen weakened to hit 134.47 per dollar, its softest since Feb. 27, 2002, and the euro hit its highest level against the safe-haven yen since Jan. 5, 2015, as the Bank of Japan remains one of the few global central banks to maintain a dovish stance while others have adopted tightening policies of hiking interest rates to combat inflation.

The European Central Bank (ECB) is expected to take a hawkish stance, with interest rate hikes to begin in July as traders price in 75 basis points of hikes by September. read more

"Right now we are seeing a market, we are really playing tug-of-war here," said Edward Moya, senior market analyst at Oanda in New York.

"We are about to get some hawkishness from the ECB, they are finally going to be tackling inflation, and probably a few more hot inflation reports in the U.S., so we are still going to see calls for the Fed to remain aggressive with tightening. ... That just will probably mean FX is going to be pretty choppy over these next few months."

KITCO