The euro was 0.05 per cent higher at $1.0767, but stayed near lows of $1.07595 it hit on Wednesday

The euro was near a three week low on Thursday as traders intensified bets that the European Central Bank will begin cutting rates from March 2024, while the dollar was steady ahead of a key payrolls data later this week.

The euro was 0.05 per cent higher at $1.0767, but stayed near lows of $1.07595 it hit on Wednesday. The greenback is 1 per cent lower this week and on course for the sharpest weekly drop since May.

Traders are betting that there is around an 85 per cent possibility that the European Central Bank cuts interest rates at the March meeting, with around 150 bps worth of easing priced by the end of 2024.

The question of a rate cut could emerge in 2024, European Central Bank member and Bank of France head Francois Villeroy de Galhau told a French paper in an interview published on Wednesday.

Villeroy told La Depeche du Midi that “disinflation is happening more quickly than we thought.”

The European Central Bank will set interest rates on Thursday next week and is all but certain to leave them at the current record high of 4 per cent. The Fed and BoE are also likely to hold rates steady next Wednesday and Thursday respectively.

The dollar has found its footing this month after a 3 per cent decline in November as traders ramp up rate cut bets for other central banks.

The dollar index, which measures the U.S. currency against six peers, was little changed at 104.12, having increased 0.17 per cent overnight. The index is 0.9 per cent higher this week, on course for its strongest weekly performance since July.

Data on Wednesday showed U.S. private payrolls increased less than expected in November, in yet another indication that the labour market is gradually cooling.