© Reuters. The euro shoots up to 1.10 dollars after the drop in inflation in the US
Frankfurt (Germany), April 12 (.).- The euro shot up today and touched $1.10, its highest since the beginning of February, after publishing the fall in inflation in the US in March to 5%, greater than than expected, so the Federal Reserve (Fed) does not need to be as aggressive with its interest rates.
The euro was trading around 3:00 p.m. GMT at $1.0995, compared to $1.0917 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 $1.0922.
The annual rate of inflation in the United States continued to decline in March, for the ninth consecutive month, standing at 5%, one percentage point below February and the lowest rate since May 2021.
In monthly terms, on the other hand, consumer prices rose one tenth in March (compared to the four tenths they rose in February).
In addition, core inflation, which measures the rise in consumer prices minus food and energy prices, the most volatile, rose four tenths in March and placed its interannual rate at 5.6%.
Despite rising core inflation, markets expect the Fed to raise interest rates at most two times by 25 basis points each.
Equities rose and sovereign debt yields fell sharply, especially bonds at the closest end of the curve, those with shorter maturities.
The Fed will publish this Wednesday the minutes of its March monetary policy meeting, in which it raised its interest rates by a quarter of a percentage point, to a range between 4.75% and 5%, and its president, Jerome Powell, was cautious.
If the report maintains this cautious tone, the dollar could depreciate further.
The governor of the Bank of France, Francois Villeroy de Galhau, considered that inflation in the euro area may be more persistent than previously expected, especially core inflation, which is also rising in the countries that share the euro.
The single currency was exchanged in a fluctuation band between 1.0914 and 1.0998 dollars.
