Dollar falls broadly on euro's rally after ECB Lagarde's hawkish comments

The single currency rallied across the board on Thursday as the European Central Bank kept its rate on hold but President Christine Lagarde hinted at rate hikes in 2022 during her press conference.  
  
Reuters reported the European Central Bank finally acknowledged mounting inflation risks and even opened the door a crack to an interest rate increase this year, marking a remarkable policy turnaround for one of the world's most dovish central banks. "Inflation is likely to remain elevated for longer than previously expected but to decline in the course of this year," ECB President Christine Lagarde told a news conference. "Compared with our expectations in December, risks to the inflation outlook are tilted to the upside, particularly in the near term," she said, arguing that price growth across the 19 countries that use the euro is becoming more broad-based.  
  
The single currency remained under pressure in Asia and weakened to session lows at 1.1268 ahead of New York open. The pair then jumped in post-ECB trading to session highs of 1.1451 in New York after hawkish comments from ECB President Christine Lagarde.  
  
More updates from Reuters, the European Central Bank kept policy unchanged as expected on Thursday, curbing stimulus over the coming months but maintaining plenty of support for the economy even after inflation unexpectedly hit a fresh record high. After the ECB extended support measures only in December, policy change was not expected to be on the agenda. But stubbornly high inflation - which rose to 5.1% last month in the 19-country euro zone - is complicating life for the bank and ECB President Christine Lagarde will be under pressure to address the issue in her 1330 GMT news conference. Making only the smallest change to its statement, the ECB removed a clause stipulating that its next policy move could be in "either direction". The Governing Council stands ready to adjust all of its instruments, as appropriate, to ensure that inflation stabilises at its 2% target over the medium term," the ECB said.  
  
Versus the Japanese yen, dollar found renewed buying at 114.33 in Asian morning and gained steadily in European trading to session highs at 114.97 ahead of New York open due partly to cross-selling in jpy before moving sideways.  
  
The British pound also remained under pressure in Asia and dropped to session lows at 1.3539 in European morning. The pair then jumped to session highs of 1.3628 ahead of New York open on Bank of England's 25 basis point rate hike and later swung sideways with a firm bias in New York trading.  
  
According to Reuters the Bank of England raised interest rates to 0.5% on Thursday and nearly half of its policymakers wanted a bigger increase to contain rampant price pressures, as the central bank warned inflation will soon top 7%. In a surprise split decision, four of the nine members of the Monetary Policy Committee wanted to raise interest rates by half a percentage point to 0.75%. This would have been the biggest increase in borrowing costs since the BoE became operationally independent 25 years ago. The majority, including Governor Andrew Bailey, voted for a 0.25 percentage point increase.  
  
Data to be released on Friday :  
  
New Zealand building permits, China Market Holiday, Germany industrial orders, France non-farm payrolls, U.K. Market construction PMI, EU retail sales, U.S. non-farm payrolls, private payrolls, unemployment rate, average earnings, Canada employment change, unemployment rate and Ivey PMI.