By Alun John

HONG KONG (Reuters – Euro held the majority of its overnight gains Thursday after posting its steepest daily gain in six years. This was due to the euro’s highest daily jump since April 2006, when it experienced its sharpest daytime rise in over six years.

The European Central Bank will meet later today to discuss how Russia’s invasion in Ukraine might affect monetary policies. Traders are now awaiting this meeting. The Federal Reserve will likely be influenced by U.S. inflation data, so expectations for next week’s Federal Reserve meeting to rise.

After jumping 1.6% Wednesday, the euro traded at $1.1047. This was its highest day since June 2016. It also saw gains in European stocks as well as a decrease in bond prices.

The Russian invasion of Ukraine had a negative impact on European growth, and the common currency fell to a 52-month low of $1.0804 in the previous week.

A glance at the market in general, and especially in the euro zone, might lead casual observers to believe that Ukraine’s war ended in an instant. NAB analysts said in a morning report that the war in Ukraine was far from over.

The two countries attributed their euro gains to optimism before a meeting between Russia’s and Ukraine’s foreign ministers. This was the first meeting between them since Russia invaded Ukraine just two weeks ago. Reports also indicated that the European Union was in discussions about bond issuances to finance defense and energy spending.

NAB also highlighted “suspicions that the ECB may not fully reverse the early February hawkish tilt when it meets later this afternoon, considering the fact inflation is destined push even higher due to the recent energy price shock.”

Russia considers its actions against Ukraine “special”

Sterling was stable at $1.3163 after jumping 0.65% overnight with the euro. The safe-haven Japanese yen was at 116.09 per dollar which was its lowest point in over a month.

It was 98.163 at the time of writing, having fallen 1.2% overnight due to the surge in euro. The yen and sentiment towards riskier assets, such as equities, also hurt the yen.

Stocks in the United States rose sharply overnight as oil prices plunged after the United Arab Emirates declared it would increase output.

This provided an additional boost for the risk-sensitive Australian currency, which last reached $0.7307 at 0.7% after rising 0.7% Wednesday.

U.S. inflation data will also be available on Thursday. These are particularly important given that the Fed meets next Wednesday and it is widely anticipated to raise its benchmark overnight rate by quarter of a point.

Reuters polled economic experts and predicted that the U.S. consumer prices index would rise 7.9% in February on a year to date, up from 7.5% back in January. But this is only a first impact due to the increase in oil price.