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© Reuters. The euro rises to 1.06 dollars after data from the eurozone
Frankfurt (Germany), Jan 4 (.).- The euro appreciated this Wednesday and exceeded 1.06 dollars, after the publication of data showing that inflation is subsiding in the euro area and that the economic slowdown is slowing down.
The euro was trading around 4:00 p.m. GMT at $1.0589, compared with $1.0570 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 $1.0599.
“Euro zone economic slowdown slows in December as price pressures ease,” according to S&P Global, which is now part of IHS Markit.
The final composite index of total activity in the euro area, the manufacturing sector and the services sector stood at 49.3 points (47.8 points in November), the highest in five months.
The final index of service sector activity in the euro area stood at 49.8 points (48.5 points in November), the highest in four months.
These economic data somewhat supported the price of the euro because they suggest that the worst is over and that inflation remains very high but has already passed its maximum peak.
Year-on-year inflation fell in December in Spain, Germany and France.
The Purchasing Managers’ Index for the US manufacturing sector fell to 48.4 points in December (49 points in November), the lowest level since May 2020 and the fourth consecutive drop, according to the Institute for Supply Management ( ISM).
A number below 50 indicates that activity in the manufacturing sector is contracting.
The Federal Reserve (Fed) publishes this Wednesday the minutes of its December monetary policy meeting, in which it could give clues as to how much more it will raise its interest rates.
The euro could appreciate in early 2023 as risk tolerance increases, energy prices fall and if there is a de-escalation in the war in Ukraine, allowing markets to focus on the ECB’s tightening monetary policy , considers General Society (EPA:).
ECB President Christine Lagarde said in December that interest rates will rise further this year.
The Governing Council considers that it will have to increase interest rates still significantly at a sustained pace to ensure that inflation returns to the 2% target over the medium term.
The single currency traded in a trading band between $1.0548 and $1.0630.
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