By Peter Nurse
Investing.com – The US dollar gained positions on Friday, buoyed by gains against the Japanese yen, while the euro rose after the European Central Bank’s bullish turn.
At 9:00 AM ET, the , which tracks this coin against a basket of six other majors, was up 0.1% at 98.627.
He is up 0.5% to the 116.70 level, posting his highest level since January 2017, and is up 1.5% this week, his biggest weekly gain since October.
This movement occurs after learning on Thursday that prices shot up 7.9% year-on-year in February, their biggest annual rise in the last 40 years.
Both the and the hold their monetary policy meetings next week, but while this inflation report confirms that the Fed will tighten its monetary policy by raising interest rates, the Bank of Japan will maintain a dovish monetary policy.
The pair is up 0.1% to 1.0984, a day after the European Central Bank announced it would speed up its monetary policy tightening plans, phasing out all its summer asset purchases if inflation It doesn’t go down fast enough.
However, although the euro has risen, it has struggled to retain most of the post-announcement gains.
“By ending asset purchases ahead of schedule, they are taking the dangerous step of tightening monetary policy in the midst of slowing growth. Even Lagarde said the risks to growth are to the downside,” says Kathy Lien, an analyst at 60 Second Investor.
Analysts at Goldman Sachs said Thursday that they believe the eurozone’s economic output will actually contract in the second quarter, citing the region’s proximity to the Ukraine war.
ABN Amro (AS:) now has a case to say that the euro will reach parity with the dollar or even fall below the greenback for the first time in about two decades, as supply disruptions of major raw materials disproportionately affect the economy of the euro zone and delay the adjustment of the monetary policy of the European Central Bank.
On the other hand, the pair remains stable at the level of 1.3081, despite the fact that the British economy rebounded much more than expected in January, increasing by 0.8% in the month as a whole, after a decrease of 0.2% in December.
Monetary policy makers are due to meet next week and it looks like they will raise interest rates again even before this stronger-than-expected data.
The pair lost some ground on Friday, dipping 0.2% to the 0.7345 level, after the recent strong rally due to rising commodity prices.