In response to the European Central Bank’s anticipated 50 basis point interest rate hike and the Bank of England’s more dovish stance on inflation, the euro fell against the dollar on Thursday.
According to Joe Manimbo, a senior market analyst at Convera in Washington, “the ECB was pretty much in line with expectations and the Bank of England sounded a little more dovish, so I think that’s helping to stop the dollar from falling.” . Central bankers are arguably somewhat relieved that inflation is heading in the right direction.
The euro sank 0.70% to $1.0913 on the day, and the pound slumped 1.09% to $1.2240, its lowest level since January 17. To reach 101.71, the dollar rose 0.74% against a basket of currencies.
According to Mazen Issa, senior FX strategist at TD Securities in New York, some of the ECB’s comments were also perceived as dovish, and it appears that “one more shift is underway at the global central bank.” The markets are essentially leading the central banks right now, as the central banks are in a data-dependent mode, which means they are no longer in charge.
On Wednesday, Federal Reserve Chairman Jerome Powell was perceived as taking a more dovish tone on future monetary policy, sending the dollar index tumbling to a nine-month low of 100.80. Markets responded by raising their bets that the Fed will stop raising rates in the second half of the year, following an anticipated additional 25 basis point hike in March. Powell appeared to have met his goal yesterday, casting serious doubt on the continued viability of the December point scheme, according to Issa.
Crown nears 14-year highs after rate freeze
In December, Fed officials predicted that they would raise interest rates by 5%. However, traders currently expect the benchmark rate to peak in June at 4.88% before falling to 4.40% in December. Friday’s January jobs report, which should indicate businesses added 185,000 jobs in the month, will be the key US economic announcement this week.
The euro’s resilience helped boost Central European currencies on Thursday, with the Hungarian forint rising 1% to rebound from recent losses and the Czech koruna holding near a 14-year high as the central bank signaled stability. rate continues.
Signaling rates would hold steady for longer, the US held its main interest rate steady at a more than two-decade high of 7.00% on Thursday. Governor Ales Michl stated that rates would remain higher than the market had anticipated. The European Central Bank raised interest rates by 50 basis points on Thursday, keeping the euro strong against the dollar, as investors followed the dovish lead of the US Federal Reserve on Wednesday.
BONUS VIDEO: Weekly summary of market news
(embed)https://www.youtube.com/watch?v=Dqw6Gg4r8kI(/embed)
!function(f,b,e,v,n,t,s){if(f.fbq)return;n=f.fbq=function(){n.callMethod?n.callMethod.apply(n,arguments):n.queue.push(arguments)};if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version=’2.0′;n.queue=();t=b.createElement(e);t.async=!0;t.src=v;s=b.getElementsByTagName(e)(0);s.parentNode.insertBefore(t,s)}(window,document,’script’,’https://connect.facebook.net/en_US/fbevents.js’);fbq(‘init’,’504526293689977′);fbq(‘track’,’PageView’)
