Aurelia Butler

The UK economy barely expanded in February as weaker activity in the health sector, supply chain disruption and storms undermined strong tourism growth, raising analysts’ concerns as the cost of living surges. Gross domestic product grew 0.1 per cent between January and February, down from 0.8 per cent the previous month, according to data published on Monday by the Office for National Statistics. Economists polled by Reuters had forecast an expansion of 0.3 per cent.George Lagarias, chief economist at the global consulting company Mazars, said the overall economic backdrop was “fragile and due to weaken further”, as inflation continues to climb because of soaring energy bills. This reading indicates “the UK economy is showing more signs of fragility than the US”, said Susannah Streeter, markets analyst at Hargreaves Lansdown, the financial services group.Darren Morgan, the ONS director of economic statistics, said: “The economy was little changed in February with the easing of restrictions for overseas travel — and increased confidence in booking holidays in the UK — triggering strong growth in travel agencies, tour operators and hotels.”Tour operation and accommodation output grew by 33 per cent and 23 per cent respectively. However, this was partially offset by the reduction of the Covid-19 Test and Trace and vaccination programmes, which boosted growth at the start of the year but contributed to a 5.1 per cent contraction across the health sector in February. Overall, output in the services sector, which accounts for 80 per cent of the UK economy, grew 0.2 per cent, down from 0.8 per cent in the previous month, while output in the other sectors fell. Manufacturing production fell 0.4 per cent, with the automotive sector continuing to struggle to source parts. Kitty Ussher, chief economist at the Institute of Directors, a professional organisation, pointed out that the drop in production could be the result of “falling demand from the end consumer worried about the rising cost of living.” Construction output also fell 0.1 per cent, as storms disrupted activity.Clive Docwra, managing director at property and construction consultancy McBains, said that although storms Eunice, Dudley and Franklin had an impact on work delays, “more serious underlying concerns over factors such as energy price rises, disruption due to the Ukraine crisis and rising inflation are triggering nervousness both from investors and in the construction sector itself”.The economy was 1.5 per cent bigger than its pre-pandemic level, pushed by upward revisions in previous months. The figures largely predate Russia’s invasion of Ukraine, which pushed up energy and commodities prices as well as costs for UK businesses and consumers.Samuel Tombs, economist at Pantheon Macroeconomics, predicted that GDP would contract in the second quarter, “as the recovery in consumers’ spending peters out and as output in the health sector continues to fall back to earth”.Given this weak near-term outlook for GDP growth, he forecast that the Bank of England would stop raising its main interest rate after increasing it to 1.0 per cent next month.The ONS on Monday also published UK trade data, which showed that the trade deficit widened in the three months to February.The value of goods exports rose to £28.6bn in February, from £26.5bn in January, but stayed below the £29.2bn average level in 2018, before Brexit deadlines and then Covid affected the data. Due to surging prices, UK real goods exports were 12 per cent below their 2018 average. More

Good morning. Reading though the weekend papers and research round-ups, it became clear we have crossed a market-sentiment Rubicon. For months, all anyone talked about was inflation. Now recession is the first word on everyone’s lips. We follow the trend below, and look at the financing mess in the commodities complex. Email us: [email protected] and [email protected]. Recession whispers, part 2Friday’s letter pointed out that low unemployment, such as we have now, looks like a lagging economic indicator, which can persist to the very cusp of recession. Larry Summers, in response, sent along a paper supporting that idea, which he published this month with Alex Domash of Harvard. The argument goes like this:The labour market is even hotter now than supply-side measures, such as the unemployment rate and the prime-age employment ratio, suggest. Demand-side measures such as vacancies per unemployed person and quitting rates suggest extreme tightness: “we estimate that the unemployment rate that is consistent with the current levels of job vacancies and worker quits is below 2 per cent.” Here, for example, is a chart of openings per unemployed:

Historical experience shows that this level of labour-market tightness means that wage growth, currently clocking in at 6.5 per cent, is likely to rise further in the coming months and bring overall inflation with it.When wage inflation and employment have been near their current levels, the only way monetary policy has been able to control inflation is by tightening enough to induce a recession, as shown in this depressing table:

In all recent instances where the Fed has engineered a “soft landing,” the labour market was been much looser, as shown here:

Some economists have technical objections to the job opening data, pointing out, for example, that the way jobs are listed has changed a lot over time. I would raise a broader question. While I’m impressed with the way Domash and Summers marshal the historical evidence, I think that if any time could be different, it might be this one. The pandemic and the government response makes this cycle unlike others. Recession looks likely to me, but not much would surprise me at this point.Speaking of which: despite many indicators showing a red-hot economy and tight supply chains, domestic US shipping is cooling off, suddenly and meaningfully.In a striking piece of research, Bank of America transport analyst Ken Hoexter downgraded a raft of trucking, rail, and delivery companies in response to lower demand and weaker pricing. In the bank’s most recent survey of trucking companies, “A large number of respondents commented that pricing is declining rapidly, capacity is available, and these shifts could signal a downturn in the economy and lower demand.” Per-mile truck freight rates are falling fast, as the dark blue line here shows:

Shipping industry leaders have taken note of the shift in conditions: We recently hosted both UPS [package delivery] and XPO [trucking] management who noted that the labour market had loosened a bit. On our recent call with Judah Levine, [head of research at global freight booking platform Freightos], he noted inflation is starting to impact consumer demand. In yesterday’s BofA Container Shipping Outlook Call, Hua Joo Tan of [ocean shipping consultancy] Linerlytica highlighted that container demand is softening (in excess of seasonality and a new wave of China lockdowns), port congestion is past peak (and less of an issue than weak export demand), and effective capacity is increasing as bottlenecks ease, adding to downward rate pressureThis is not to suggest the global transport market has fallen off a cliff in March. As Oxford Economics’ Oren Klachkin notes: “Transportation pressures increased in March . . . shipping costs rose and air cargo volumes increased on the month. But on the bright side, ocean shipping activity moderated, with reduced queues at LA and Long Beach,” the most important ports for Asian manufactured goods entering the US. A chart:

Perhaps none of this is terribly surprising, given that US wholesale inventories are back to — or even above — their pre-pandemic trend level:It may be, in short, that the change of mood in shipping is the first indication of what “team transitory” inflation doves have long promised: that inflation, which appeared so suddenly last autumn, might subside equally quickly as supply chains normalise and excessive pandemic fiscal stimulus fades. Is demand winding down on its own, after a single rate increase? If so the Fed may be able to back off before recession takes hold.Alternatively, it could be that the recent shipping data is a blip in a volatile industry. Or that it is already too late to avoid recession, whatever the Fed does. Watch this space.The commodities financing crunch is about real assetsA month ago, it wasn’t crazy to worry that western sanctions against Russia might set off a financial crisis. Western banks’ $100bn in Russian exposure could have spread losses around the world and put post-crisis banking rules to the test. Happily, it didn’t happen. A much-watched indicator of bank funding risk spiked in early March, but quickly fell as everyone realised Ukraine wasn’t about to cause a 2008-style implosion:A big financial blow-up — like banks in 2008 or Treasuries in 2020 — hasn’t been the story of this crisis. Rather, it’s been all about commodities. This time, a problem in real assets is spilling into financial markets, not the other way around.The action is clearest in energy markets, where prices were already rising before Russia supercharged them. In normal times, oil drillers use derivatives — usually swaps or futures contracts — to hedge. The idea is to short future oil prices and lock in a profit. If prices go up, now your oil is worth more. If prices fall, your short position is worth more. If you hedge wisely, either outcome is acceptable. Other types of energy companies, such as utilities, might make the opposite bet to lock in prices — ie, go long on oil prices to guarantee stable input costs.But with oil volatility going wild, this commodity-hedging system is under pressure. Some reports suggest hedging costs have increased by 25 per cent or more. Margin calls on existing hedges are rolling in. On Thursday Shell acknowledged that it was forced to divert billions in cash holdings, $3bn by one estimate, to finance its margin requirements. Market measures also suggest dwindling liquidity. The number of active futures contracts on Brent crude oil has fallen sharply since March:

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Oil traders have been agitating for weeks for government help. And on Friday, they got something. From the FT’s Martin Arnold:The German government has announced an aid package to support companies hit by the fallout of the Ukraine war . . . The measures include a new €100bn programme of short-term loans from state-owned KfW development bank for energy companies struggling to cover the vastly increased cost of insuring themselves …“We will cushion hardship and prevent structural breaks,” said [finance minister Christian] Lindner, adding that the plan was “precisely targeted” to avoid discouraging the transition away from fossil fuels.Something similar to this German “shock absorber” package is being rolled out in France too. The US Commodity Futures Trading Commission has so far played down any need for it to respond, but in an echo of post-2008 financial politics, activist groups are already demanding that it pledge to “unambiguously reject any bailout for commodity traders”. Thinking of this as a financial crisis in commodities probably misses the point, though. Commodities are very expensive and that is hurting those who use them. Fixing the financing won’t make that any less severe. (Ethan Wu)One good readJanan Ganesh against psychobabble. More

Your browser does not support playing this file but you can still download the MP3 file to play locally.Our latest season of Tech Tonic continues, with a deep dive into the semiconductor industry and Taiwan’s unique position as a bastion of computer-chip talent. James Kynge, the FT’s global China editor, looks into the unintended consequences of the race for semiconductor dominance. We hear from Chad Duffy, a Taipei-based cybersecurity expert who helped uncover a major hack on Taiwanese semiconductor manufacturers. James talks to Dan Wang, an analyst with the Shanghai-based Gavekal Dragonomics, about China’s chip strategy, and Stephen Orlins, a rare dissenting voice in Washington who questions the efficacy of a US blacklist of Chinese tech companies desperate for US-designed chips. Plus, Annie Ting-Fang and Lauly Li, who cover the semiconductor industry for Nikkei Asia, give us the inside track on how China has been scooping up Taiwanese semiconductor engineers.Check out stories and up-to-the-minute news from the FT’s technology team at ft.com/technologyFor a special discounted FT subscription go to https://www.ft.com/techtonicsaleAnd check out FT Edit, the new iPhone app that shares the best of FT journalism, hand-picked by senior editors to inform, explain and surprise. It’s free for the first month and 99p a month for the next six months.Presented by James Kynge. Edwin Lane is senior producer. Josh Gabert-Doyon is producer. Manuela Saragosa is executive producer. Sound design is by Breen Turner, with original music from Metaphor Music. The FT’s head of audio is Cheryl Brumley.News clips credits: CNBCRead a transcript of this episode on FT.com See acast.com/privacy for privacy and opt-out information.Transcripts are not currently available for all podcasts, view our accessibility guide. More

Forget all the fancy talk about neutral interest rates and output gaps. The two basic questions facing the Federal Reserve are simple to state and complex to answer: is the world’s most powerful central bank finally committed to return monetary policy to serving the real economy rather than financial markets; and can it do so in an orderly fashion?These questions are yet to be sufficiently grasped by markets, and for good reason. Viewed from their perspective, the risk for the Fed of not following the market’s lead is too costly. Yet, even if they are ultimately correct, markets will very likely find themselves with much less of an influence on monetary policy than in recent times. The background to the current situation is well known. For too long, monetary policy has been essentially co-opted by markets. The phenomenon started innocently enough with central bankers’ desire to counter the damage that malfunctioning markets inflict on economic wellbeing. Rather than occurring rarely with well-targeted implementation, massive liquidity injections and floored interest rates developed into a habit.Over and over again, the Fed felt compelled to use its powerful liquidity-creation weapons to counter asset price declines, even when the risk of disorderly and volatile markets was not apparent. At times, such “unconventional” measures were consistent with the needs of the real economy. Too often, however, they were not. Like a child successfully throwing tantrums to get more sweets, markets came to expect looser financial conditions whenever there was a strong whiff of instability. This expectation evolved into insistence. In turn, the Fed went from just responding to market volatility to also trying to pre-empt it.Central bankers were not blind to the unhealthy co-dependencies. The current leaders of both the Fed and the European Central Bank, Jay Powell and Christine Lagarde, tried early in their tenures to change the dynamic. But they failed, and were forced into embarrassing U-turns that made markets feel even more empowered and entitled to insist on the continuation of ultra-loose policies.Today, however, the two-decade-long market dominance over monetary policy is threatened like never before by high and persistent inflation. Central banks have little choice but to relegate market considerations in the face of accelerating price increases that severely undermine standards of living, erode the future growth outlook and hit hardest the most vulnerable segments of society.The situation is particularly acute for the Fed given its gross mischaracterisation of inflation for most of last year, together with its failure to act decisively when it belatedly recognised that price instability had taken root under its watch. But how best to do so is a problem, given how much the Fed’s delayed understanding and reaction have narrowed the pathway for orderly disinflation. That is, the difficulty of reducing inflation without unduly harming economic wellbeing has only increased. For that, the central bank should have initiated the policy pivot a year ago. If the Fed now validates the aggressive interest rate rises that markets anticipate, starting with a 50 basis point increase when its top policy committee next meets on May 3-4, it risks seeing them price in yet more tightening. The outcome of this dynamic would be an even bigger policy mistake as the Fed pushes the economy into a recession. If, however, the central bank fails to validate market pricing, it could erode its policy credibility further. This would undermine inflation expectations, causing the inflation problem to persist well into 2023 if not beyond. The situation is made more complicated by the likelihood that these two alternatives would result in a degree of financial instability in the US and elsewhere. Even worse — and this may well be the most likely outcome — the Fed could flip-flop over the next 12 to 24 months from tightening to loosening and then tightening again. The Fed may characterise such flip-flopping as nimbleness but it would prolong stagflationary tendencies, weaken its institutional standing and fail decisively to return monetary policy to the service of the real economy. And for those in the markets that would deem this a victory, it would probably prove a fleeting one at best. The time has come to return monetary policy to the service of the real economy. It is a far from automatic and smooth process at this late stage. Yet the alternative of not doing so would be a lot more problematic. More

Jay Rushin used to look at global wheat prices once a quarter or so. Now he checks them every other day. The chief executive of H&H Bagels, a New York staple for 50 years, had hoped to reopen its Upper West Side store last summer, but a global semiconductor shortage meant that the toasters he ordered last May were not shipped until February.By the time the shop opened last week, redesigned as the flagship of a brand that Rushin hopes to franchise, the spot price of wheat — a crucial ingredient in bagels — had soared 35 per cent above last year’s levels in response to Russia’s invasion of Ukraine.With a tight labour market also driving wages higher, Rushin has raised prices by an average of 5 per cent and looked for ways to cut costs, dropping less popular items such as baked salmon from the menu and using software to schedule employees’ hours more efficiently.The challenges facing H&H are plaguing companies large and small across the US, as disruptions wrought by Russia’s war in Ukraine magnify the inflationary pressures brought on by Covid-19.The rise of US inflation to 40-year highs is showing up in increased prices for customers, reduced earnings outlooks for some companies and anxiety among policymakers about the effect on low-income consumers.Conagra Brands, the maker of Slim Jim meat snacks, warned this week that the rising cost of ingredients from chicken to butterfat had left it facing an “unprecedented” 26 per cent jump in prices over two years.Constellation Brands, the company behind Corona beer, told analysts it was paying 17 per cent more for cartons, 26 per cent more for bottle caps and 35 per cent extra for wooden pallets.Across corporate America, there were three times as many mentions of “inflation” in company presentations in March as there had been a year earlier, according to Sentieo, the data provider.Some companies are citing price pressures as reasons to lower their profit expectations. FactSet reported last week that more S&P 500 companies had issued negative earnings guidance than in any quarter since before the pandemic.WD-40, the lubricant oil manufacturer, for example, said it was raising prices but would have to trim its full-year net income guidance by about 2 per cent due to “the challenging inflationary environment”.Levi Strauss, meanwhile, beat Wall Street’s expectations for its fiscal first quarter but held to its full-year outlook in anticipation of more inflationary pressures in the coming months. Chip Bergh, chief executive, told the Financial Times that he had learnt from running businesses in the 1980s, the last time US inflation was this high, to raise prices in anticipation of increasing costs. “You’ve got to get in front of it because if you don’t, you just can’t catch up,” he warned.Companies have so far been able to pass on most of their higher costs without affecting sales. As the war between two of the world’s largest grain exporters sent cereal prices soaring last month, Earnest Research found that General Mills, PepsiCo and Kellogg, the makers of Cheerios, Quaker Oats and Special K, all implemented double-digit price increases.Even as the Federal Reserve tries to tame inflation by raising interest rates, some policymakers are voicing concerns about its disproportionate effect on poorer consumers.Lael Brainard, a Fed governor tapped by President Joe Biden’s administration to serve as vice-chair of the central bank, on Tuesday noted that low-income households spend 77 per cent of their income on necessities, more than double what higher-income households spend, and many are less able to save by buying in bulk.She illustrated the challenge by citing the example of an increase in the prices of both a brand-name cereal and a cheaper store brand that maintained the differential between them. “A household that had been purchasing brand-name cereal could save money by purchasing store-brand cereal instead,” she observed. “However, a household that was already purchasing the store brand would have to either absorb the increase in cost or consume less within that category.”

One consumer industries chief executive who is grappling with higher prices for resin and pulp echoed that concern, telling the FT: “From here, the economics get harder and harder for the middle and lower economic set.”A BCG poll found that just 40 per cent of investors now expect inflation to return to more normal levels by the end of 2022, down from 60 per cent in January, and several executives said fast-rising labour and logistics costs were exacerbating the inflation in commodity prices.Truck drivers had seen a $1.50-per-gallon increase in the price of diesel in a matter of weeks, noted Mac Pinkerton, president of North American surface transportation for CH Robinson, a truck freight group.If sustained, that would equate to $50bn to $60bn of additional supply chain costs for the industry, he estimated, with most passed on to customers.Logistics costs have also been inflated by companies offering higher wages to attract enough drivers to meet demand. Walmart, which two years ago said that its truck drivers earned an average of $87,500 a year, last week raised the starting pay week so they could earn up to $110,000 in their first year.Such pressures are forcing companies to adapt. Constellation Brands is hedging more aggressively, Levi Strauss has renegotiated rents, and Lowe’s, the DIY retailer, is optimising drivers’ routes to curb fuel costs.Others are trimming their product offerings in ways resembling H&H Bagels’ menu rethink.Mike Alkire, chief executive of Premier, a group-purchasing organisation for hospitals, said suppliers had been pushing for price increases on more than 170 products, while the hourly rate for a travelling nurse had risen threefold.Faced with such pressures, Premier was having to buy in bulk and narrow the range it offered, he said. “People used to [ask for] a specific colour of bedpan. All that is out the window.” More

Danish green energy company Orsted is building its coal stockpile in anticipation of burning more of the fuel next winter, just as the EU approved a ban on Russian coal imports as part of a fifth round of sanctions.Chief executive Mads Nipper said a global shortage of wood pellets, which fuel Orsted’s biomass power stations, meant the company was likely to use coal instead later in the year. “However much we hate it, we are very likely going to see a temporary increase in our coal use, compared to the trajectory that we have been in,” Nipper told the Financial Times. “That is driven by the situation out of the war,” he said, explaining that Russia’s invasion of Ukraine, combined with global supply chain challenges, had made it extremely hard to procure the specialised wood pellets Orsted usually relies on. “Biomass is hard to get right now because everyone is looking for fuel,” Nipper said. “We have sourced additional back-up coal to ensure that we are prepared.”The $59bn company’s share price has dropped by about one-sixth over the past 12 months, partly owing to low wind speeds that hit revenues. While Orsted is known as the world’s biggest developer of offshore wind farms, the company also has a gas trading arm, a US clean energy business, and operates nine power plants in Denmark. Of those, six plants run on wood pellets or wood chips; two run on gas; and one runs on coal. Some plants burn more than one type of fuel.In the midst of an energy crisis in Europe triggered by the war in Ukraine, Nipper said the increase in coal use was a “necessary short-term evil” and the company’s plans to close the one remaining coal plant next year were unchanged. Orsted also imports gas from Russia, under a purchase contract with Gazprom that runs until 2030. Moscow has demanded that foreign buyers pay for their gas in roubles — a condition that most EU countries have refused to meet — and threatened to cut off supplies if they do not. Nipper said that Orsted has “no intention” to pay for its gas in roubles. “We are sticking to the contractual terms that we have,” he said, adding that the company was in dialogue with the European Commission about how to handle the situation.“We really don’t want to deal with Gazprom, we would clearly rather not. But we need to make sure that whatever we do, does not send more money toward Russia,” said Nipper. Amid Europe’s growing energy security concerns, the region is accelerating its push toward renewable power such as wind and solar. Nipper called for governments to speed up the permitting process so that clean energy projects can be built more quickly. However, he acknowledged that because of the construction time required, wind power could not help to address the situation in the short term. “Converting an energy system, is not something that can happen in 12 or 24 months,” said Nipper. “But we are in a hurry, we need to do everything we can to speed up that conversion.” More

In 1931, John Maynard Keynes published a short essay entitled “Economic Possibilities for Our Grandchildren” in which he considered the feasibility of solving what he called “the economic problem”. According to Keynes, the issue of scarcity ought to have been dealt with by the early 21st century. Decades of capitalist progress would leave society with the capacity to produce the resources needed to guarantee everyone a good standard of living. The problem, at this point, would be finding ways to spend well-earned leisure time.

More than 90 years later, it is fair to say that Keynes’ prediction of abundance was not wrong: the scale of production possibilities available to us in 2022 is well beyond what he probably imagined in 1931. But “economic problems” have not gone away. In fact, there is an intellectual debate raging over how to define our primary issues and what to do about them. Is finding a way to create more growth still the key to a good society? Or is our primary economic problem finding a way to deal with inequality and environmental degradation?The most recent contribution to this debate comes from Jonathan Haskel, professor of economics at Imperial College Business School, and Stian Westlake, chief executive of the Royal Statistical Society. They situate themselves firmly in the “more growth” camp. Their book, Restarting the Future, suggests that capitalism can be revitalised by promoting “further investment” in what they call “intangible capital”. This thesis builds on their last collective effort, Capitalism without Capital, published in 2017. In that book, Haskel and Westlake outlined how the capitalist system has shifted from investment in physical capital, such as machines and factories, towards intangible capital, such as software. Importantly, this kind of capital behaves differently from physical assets: the more it makes up the economy, the more it can change the dynamics of capitalism itself. In their latest outing, Haskel and Westlake argue that the speed of these changes in capitalism has not been matched by developments in the institutions that govern the economy. For example, government research and development spending is still based on producing more brand new research when good quality innovation now derives from unique combinations of different kinds of existing capital. The result of these “institutional lags” has been sub-par investment in intangibles and low economic growth. The solution Haskel and Westlake propose is a range of institutional fixes that will drive prosperity in the new, intangible-rich economy. The book is strongest when it deftly explores the policies that could help enliven investment. Here, as economists, the authors can play on home turf — exploring the best way to squeeze juice out of the intangible orange. In a series of policy discussions on cities, finance, competition and R&D funding, they outline how intangibles can be harnessed to create growth and what more can be done to manage the undesirable impacts of economic transformation — such as the increasing divide between cities and towns. More controversial is their argument that enlivening the growth engine of intangible capital will produce a solution to our current political economic woes. This idea relies on a theory of social change where political and economic stability is essentially unlocked through growth. This growth in turn relies on finding the right institutional “code” to unlock the kind of market exchange which brings prosperity, happy citizens and a flourishing society. It is interesting to speculate what Keynes would have made of this argument. It is undoubtedly the case that he would have been impressed by Haskel and Westlake’s vision of a prosperous society, harnessing the power of “intangible” investment to create great leaps in productivity and output. He may also, one suspects, have been sceptical of whether further growth in an era of relative historical abundance is still the primary “economic problem”. This is especially the case in an era where capitalism’s growth orientation is increasingly indivisible from some of the overlapping, existential environmental crises confronting us. The insights of Haskel and Westlake on how institutions currently inhibit an economy dominated by intangibles are valuable. Their recommendations, if adopted, may well unlock further growth. But this alone cannot create a better future: the “economic problem” is now far more complex than that. Restarting the Future: How to Fix the Intangible Economy by Jonathan Haskel and Stian Westlake, Princeton University Press, £22, 320 pages More

SINGAPORE (Reuters) – The euro made a firm start to the week on investor relief that incumbent Emmanuel Macron led first-round voting in the French presidential election, while other moves were slight ahead of central bank meetings in Europe, Canada and New Zealand.The euro briefly flickered as high as $1.0955 in thin early hours of the Asia session, before settling about 0.15% higher than Friday’s close at $1.0890. It was also firmer on sterling and the yen.With 88% of votes counted, Macron garnered 27.41% and his far-right challenger Marine Le Pen was next with 24.9%.They will contest a runoff vote on April 24. Macron’s lead gave some confidence to markets leery of Le Pen’s protectionism even if she no longer advocates ditching the euro, though gains were capped ahead of Thursday’s European Central Bank meeting.”It’s a patchy bit of support,” said Westpac strategist Imre Speizer, as investors are also grappling with an ECB unlikely to sound as aggressive as Federal Reserve in heading off inflation.”I think that biggest story of the two central banks being quite different is probably quite supportive of the U.S. dollar in the longer run,” he said.The U.S. dollar index topped 100 for the first time in nearly two years on Friday, and was steady at 99.805 in morning trade. Against the Japanese currency the dollar was firm and bought 124.32 yen.The ECB has been weighing rising consumer prices against pressure on growth from war in Ukraine. It is expected to give more details about a wind down in asset purchases on Thursday but may not give any further explicitly hawkish signals. Central bank meetings are also due in Canada and New Zealand on Wednesday and interest rate swaps pricing indicates that traders see a more than 90% chance that each hikes rates by 50 basis points.That could leave both currencies vulnerable if a smaller rate rise is delivered.The New Zealand dollar wobbled 0.2% lower to $0.6836, while the Canadian dollar held at C$1.2583 per greenback.Elsewhere, the Australian dollar also eased 0.2% to $0.7447 as gains in commodity currencies start to fade further with a retreat in export prices. Sterling held at $1.3026.========================================================Currency bid prices at 0015 GMTDescription RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.0888 $1.0875 +0.13% +0.00% +1.0955 +1.0883 Dollar/Yen 124.3700 124.2900 +0.06% +0.00% +124.4200 +124.3600 Euro/Yen 135.42 135.14 +0.21% +0.00% +135.6500 +135.2900 Dollar/Swiss 0.9343 0.9362 -0.21% +0.00% +0.9344 +0.9290 Sterling/Dollar 1.3028 1.3033 -0.04% -3.67% +1.3040 +1.3028 Dollar/Canadian 1.2588 1.2572 +0.14% -0.44% +1.2590 +1.2567 Aussie/Dollar 0.7448 0.7460 -0.17% +2.45% +0.7465 +0.7440 NZ Dollar/Dollar 0.6837 0.6848 -0.19% -0.14% +0.6854 +0.6832 All spotsTokyo spotsEurope spots Volatilities Tokyo Forex market info from BOJ More