Euro fell to $1.05 after US inflation figures

Frankfurt (Germany), June 10 (EFE). – The euro fell today to the level of $ 1.05, the lowest for three weeks, after the publication of US inflation figures.

The euro was trading at $1.0535 at around 3pm GMT, down from $1.0650 in late European forex trading the previous day.

The European Central Bank (ECB) set the reference exchange rate for the euro at $1.0578.

Consumer prices in May in the United States rose three-tenths, to 8.6%.

These figures support the strength of the monetary policy moves of the Federal Reserve (Fed), which next week will raise the money price, as expected, by half a percentage point and will suggest more similar increases through the end of the year.

Increases in interest rates in the United States support the dollar because the profitability of investments denominated in this currency is greater than investing in euros.

In addition, investors turned to the dollar in the face of uncertainty due to rising inflation and lower consumer confidence in the US.

The Euro had already lost ground on Thursday despite the fact that the European Central Bank was more aggressive and announced the start of a new round in July of raising interest rates in the Eurozone and normalizing its monetary policy.

For now, the ECB is starting to follow the Fed, only making it clear that it will raise interest rates in July by a quarter point, the first hike in 11 years to curb inflation, and again in September, though. Still no quantification.

UniCredit economist Marco Valli expressed concern that the European Central Bank could reduce the impact of tightening financial conditions on economic activity.

Valli said the EUR weakness in reaction to yesterday’s ECB announcement “is exactly the opposite of what the ECB was hoping to achieve and seems to indicate that the markets are smelling of trouble.”

The euro initially rose after the European Central Bank announced its interest rate roadmap, but later fell.

The explosion in ocean bond margins sent the euro down, according to analysts at Monex Europe.

The interest rate on 10-year sovereign debt in Germany and Italy reached its highest level two years ago at a time when economic growth is weakening.

The single currency traded in a trading range between 1.0506 and 1.0642. EFE

aia / fpa

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