The euro rises and touches 1.06 dollars despite the US employment figures

Frankfurt (Germany), May 6 (.).- The euro appreciated this Friday and touched 1.06 dollars, despite the figures for the US labor market, although the recovery could be short-lived in the current environment of risk aversion.

The euro was trading at $1.0577 by 3pm GMT, versus $1.0533 in late European forex trading the previous day.

The European Central Bank (ECB) set the reference exchange rate for the euro at 1.0570 dollars.

The unemployment rate in the United States remained at 3.6% in April -the same figure registered in March and the lowest since the start of the pandemic-, a month in which there were 5.9 million unemployed.

The strength of the US labor market makes it easier for the Federal Reserve (Fed) to raise interest rates more aggressively to curb inflation.

However, as the ECB is expected to raise its rates more slowly, the spread between the two regions will increase and therefore the dollar appreciates.

The governor of the Austrian National Bank (Oesterreichische Nationalban), Robert Holzmann, said they want to discuss and approve an interest rate hike in June.

The president of the German Bundesbank, Joachim Nagel, commented that they should not wait too long for a monetary policy reaction to high inflation.

“The window of time that is now opening to undertake the first monetary policy measures is slowly closing,” Nagel told a conference organized by the German newspaper “Frankfurter Allgemeinen Zeitung.”

The Director of Foreign Exchange at Commerzbank (ETR:) Research, Ulrich Leuchtmann, believes that “an energy crisis in the euro area could push the euro below parity with the dollar.”

But he predicts that this will not happen and that the euro will rebound in the coming months despite the fact that the Fed raises its interest rates faster than the ECB.

“The euro suffers a lot from the uncertainty about the evolution of the war in Ukraine. After all, the sword of Damocles of an energy crisis hangs above all if the European Union (EU) decides on an embargo on Russian energy sources or if Russia cuts off energy supplies to the West,” according to Leuchtmann.

In this case, inflation would rise further and the euro zone economy would enter a recession, dragging the euro below parity with the dollar.

This risk already weakens the single currency, although Leuchtmann predicts that it will not materialize.

The single currency was traded in a trading band between 1.0483 and 1.0599.