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©Reuters. Euro falls after US inflation data
Frankfurt (Germany), Apr 13 (.).- The euro depreciated this Wednesday towards the level of 1.08 dollars after the publication of the US inflation data and pending the meeting of the Governing Council of the Central Bank European (ECB).
The euro was trading at $1.0846 around 3pm GMT, versus $1.0874 in late European forex trading the previous day.
The ECB set the reference exchange rate for the euro at 1.0826 dollars.
The prices that producers pay in the United States for raw materials and other supplies rose by 11.2% year-on-year last March, the highest figure recorded since this indicator began to be calculated in November 2010.
These figures were higher than expected and are an argument for the Federal Reserve (Fed) to raise interest rates more quickly.
The ECB meets tomorrow and, although it also faces inflationary pressures, it will not normalize its monetary policy at the same pace as the Fed, which puts downward pressure on the euro.
Fixed income specialist at Insight, part of investment manager BNY Mellon, Andy Burgess comments that “although elevated inflationary pressures will clearly be the priority for the ECB, the uncertainty stemming from the conflict in Ukraine will almost certainly be felt.”
And this will be enough to push the first hike into the last quarter of the year, giving the central bank more time to pass judgment on the evolution of the growth outlook.
Burgess believes that “the main risks to this view is that the moves will be made sooner rather than later.”
Muzinich & Co fund manager experts Erick Muller and Ian Horn say they don’t expect any concrete decision on interest rates or any other change in the timing of the asset purchase program; who are still waiting for it to end in July.
However, Muller and Horn expect this week’s press conference to show that a rate hike in early Q4 2022 is a real option for the governing council, should inflation fail to ease this summer.
They also note that “the euro has weakened steadily against the US dollar since mid-February, and this is not a good thing when international food and energy prices are rising.”
The single currency was traded in a trading band between 1.0809 and 1.0848.
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