©Reuters. The euro loses 1.08 dollars before a possible rate hike in the US in May
Frankfurt (Germany), Apr 22 (.).- The euro fell this Friday and lost the level of 1.08 dollars due to the rise in interest rates in the US and due to the general advance of safe-haven currencies such as the dollar.
The euro was trading at $1.0777 by 3pm GMT, versus $1.0845 in late European forex trading the previous day.
The European Central Bank (ECB) set the reference exchange rate for the euro at 1.0817 dollars.
Figures from the US economy show that private sector activity grew less than expected in early April.
The president of the Federal Reserve (Fed) of the United States, Jerome Powell, said Thursday that a future rise in interest rates of half a point in May is something that “is on the table”.
After several members of the ECB’s Governing Council came out in favor of an interest rate hike in July, President Christine Lagarde became more cautious.
Lagarde’s caution and Powell’s comments dragged the euro lower.
“Euro zone economic growth is accelerating as a rebound in service demand offsets a near standstill in the manufacturing sector, but prices rise at a record pace,” according to Markit.
Its composite index of the total activity of the euro area, the manufacturing sector and services, stood at 55.8 points (54.9 points in March), registering its maximum in the last seven months.
“The only thing that prevents the ECB from accelerating normalization is concern about growth, since inflation is already at levels that would make any central bank uncomfortable,” Monex Europe considers.
“The fact that services activity has rebounded so much despite falling real wages indicates that the economy may be more resilient than the ECB thinks,” Monex Europe analysts added.
They therefore anticipate that if new data supports this view, more members are likely to follow the recent rhetoric from the hawks, the Governing Council members in favor of tightening monetary policy.
The single currency was traded in a trading band between 1.0776 and 1.0852.