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© Reuters. The euro falls after the drop in inflation in some eurozone countries
Frankfurt (Germany), Nov 29 (.).- The euro fell on Tuesday after the drop in inflation in some eurozone countries, a drop that may allow the pace of interest rate rises to be slowed.
The euro was trading around 4:00 p.m. GMT at $1.0366, compared with $1.0410 in the final hours of European currency market trading the previous day.
The European Central Bank (ECB) set the reference exchange rate for the euro at $1.0366.
The mood improved in the markets after China gave signals that it is going to relax its zero covid policy and tighten the restrictions.
The Chinese State Council (Executive) announced this Thursday, at a press conference, that it will “accelerate” the vaccination of the elderly, one of the most vulnerable groups, but also one of the most reluctant to be inoculated.
What he has not explained is how he is going to convince this group.
Inflation fell in Germany in November to 10% year-on-year (10.4% in October) and in Spain to 6.8% (7.3% in October).
The ECB could ease the tightening of its monetary policy to the extent that inflation falls, which makes it difficult for the euro to appreciate because the Federal Reserve (Fed) also raises its interest rates.
The euro recovered 1.0350 dollars after the publication of the weakening figures for consumer confidence in the US in November, which slowed down the appreciation of the dollar.
Federal Reserve Bank of New York President and CEO John Williams said interest rates will rise more than he had anticipated in September as the labor market situation is still tight and upward pressures remain. about prices.
The president of the European Central Bank (ECB), Christine Lagarde, considered yesterday that inflation in the euro area has not yet reached its ceiling, despite exceeding 10% in October, and that for this reason the ECB will raise interest rates more .
UniCredit (BIT:) analysts believe investors are more or less divided on whether the ECB will raise interest rates by 50 or 75 basis points in December.
“Indeed, the communication from Fed members has been more consistent in recent weeks than from ECB officials,” say UniCredit analysts.
For this reason, they add, “it seems that there is still a great division within the Governing Council of the ECB on whether to increase interest rates again by 75 basis points, which would be the third of this magnitude in a row, or whether the pace should be slowed down. adjustment to an increase of 50 basis points at the next meeting on December 15”.
Until investors have more clarity on the outcome of the Fed and ECB meetings, interest rates will be exposed to sharp rises and falls daily, according to UniCredit.
The single currency was exchanged in a fluctuation band between 1.0325 and 1.0393 dollars.
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