The euro rises with a focus on the ECB, the dollar withdraws From Reuters

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© Reuters. FILE PHOTO: A Japanese Yen banknote is shown in this illustration taken on June 15, 2022. REUTERS / Florence Lo / Illustration

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By Samuel Indic

LONDON (Reuters) – The euro rose on Monday as markets focused on the European Central Bank’s tools to combat currency fragmentation, rejecting the risk of a political crisis in France so far after President Emmanuel Macron lost an absolute majority in parliamentary elections .

The Alliance of the Macron Ensemble secured the most seats in the National Assembly, but did not reach the absolute majority needed to control parliament, the final results showed.

Analysts and traders looked beyond the election result to focus on the ECB’s attempts to curb borrowing spending in the southern part of the bloc and global monetary policy prospects.

“While Macron’s presidency and majority in parliament would be very positive about eurozone co-operation and so on, it is rather long-term, it is not something that affects the markets here and now,” said Ingwild Borgen Györde, currency. analyzer at DNB Markets. .

“There are two things that are very important for the euro: what kind of anti-fragmentation tool the ECB can come up with and the prospects for monetary policy.”

ECB President Christine Lagarde on Monday reaffirmed plans to raise ECB interest rates twice this summer, while tackling widening lending spreads in various eurozone countries.

The euro last rose 0.4% against the dollar to $ 1.05365.

The dollar traded slightly at 135.03 yen after reaching 135.44 yen in trading hours in the Asia-Pacific region, close to Wednesday’s peak of 135.60, the highest level since October 1998.

The index, which measures the greenback against a basket of six currencies, including the euro and yen, fell 0.4 percent to 104.31, but remained close to a two-decade high of 105.79, reached on Wednesday when the Federal Reserve raised interest rates percentages of 75 basis points in an attempt to tame high inflation.

Fed President Jerome Powell will testify before the Senate and House of Representatives on Wednesday and Thursday this week.

Trading is likely to be light until Monday, as US stock and bond markets closed for the official holiday on June 10.

Risk-sensitive currencies such as the Australian and New Zealand dollars jumped 0.5% and 0.4%, respectively, as risk sentiment stabilized after volatile trading last week.

The dollar lost 0.3% to 0.96685 Swiss francs, while sterling rose 0.3% to 1.2256 dollars.

The leading cryptocurrency bitcoin rose 1.6% to $ 20,882 after hitting a weekend low of $ 17,592.78, a level not seen since the end of 2020.

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