Thursday, September 21, 2023

The euro falls below US$1.09 due to inflation in the United States

He euro it fell below the US$1.09 level on Thursday, after the publication of data showing that core inflation in the United States was higher than expected in July.

The euro was trading around 15:00 GMT at US$1.0845, compared to US$1.0936 in the last hours of European currency market trading the previous day.

He European Central Bank (ECB) set the reference exchange rate for the euro at US$1.0868.

actual personal spending, without energy and foodrose in the US in July by 0.2% from the previous month and 4.2% year-on-year.

These data show that the inflation is high in the United States and that more increases in interest rates may be necessary and for this reason the dollar appreciated.

The president of the Federal Reserve Bank of AtlantaRaphael Bostic, considered that monetary policy is tight enough in the US, but that if inflation rises unexpectedly it will support more interest rate hikes.

Headline inflation stood at euro zone in August at 5.3% year-to-year, as in July, but the core fell two tenths, to 5.3%.

ECB executive board member Isabel Schnabel told a conference on inflation today that the monetary politics in the euro area it must be restrictive enough to bring inflation to 2% and that decisions will depend on economic data and will be taken at each meeting.

If the ECB believes that the level of interest rates will not allow inflation to drop in time, another rate hike is warranted, but if it believes that inflation is subsiding, it could pause in September.

Schnabel stressed that the ECB cannot predict how far it will raise interest rates or how long they will remain at restrictive levels.

The single currency was exchanged in a band of fluctuation between US$1.0841 and US$1.0939.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest article