![]() ![]() As the contraction in US factory output deepened for the second month, prospects for the country’s economic recovery looked bleak. Subsequently, May’s ISM manufacturing PMI fell below forecasts, printing at 46.9 rather than 47. In contrast with the European Central Bank, markets are pricing in a roughly 32% chance that the Fed will raise rates by 25 basis points in June moreover, several Fed policymakers indicated the US central bank may ‘skip’ a month. Rather than buoying the currency, however, USD faced headwinds as investors considered that the likelihood of a rate hike was still below that of other central banks. The US Dollar slumped in a number of exchange rates on Thursday, weighed down by a comparatively dovish Federal Reserve and a deeper-than-expected contraction in US manufacturing activity.įirst of all, an increase in job openings demonstrated that employers do not feel they cannot afford to hire new staff – a sign which may encourage the Fed to hike interest rates once more. US Dollar (USD) Exchange Rates Weakened by Dovish Fed, Disappointing PMI Retracting their pessimistic outlook, money markets revised earlier estimates, predicting an 85% chance of a 25 basis point hike when the ECB meets on June 15. That is why we have hiked rates at our fastest pace ever – and we have made clear that we still have ground to cover to bring interest rates to sufficiently restrictive levels.’ĮUR/USD traded steadily higher in the wake of the speech as markets digested the news the Euro recovering from a 2-month low against a basket of currencies. At her official ‘Deutscher Sparkassentag’ speech in Hanover, Lagarde told investors: ‘Today, inflation is too high and it is set to remain so for too long. Nevertheless, the single currency managed to trend up against the ‘Greenback’ as hawkish signals from the President of the ECB undermined headwinds. Subsequently, inflation in the Eurozone weakened by more than forecast, dampening rate hike bets for the European Central Bank (ECB). ![]() While rebounding from April’s 2.4% decline, sales missed the 1% growth forecast and were 4.3% below 2022 levels. The Euro faced mixed trading stimuli yesterday, trading down against several of its peers as retail sales increased by less than forecast in Germany – the bloc’s largest economy. Euro (EUR) Exchange Rates Supported by Lagarde Speech Meanwhile, the US Dollar (USD) traded in a mixed range against its peers as a risk-positive mood undermined tailwinds.Īt the time of writing, EUR/USD is trading at $1.0757, having climbed by almost 0.7% through the course of the day. The Euro US Dollar (EUR/USD) exchange rate ticked up yesterday as the Euro (EUR) enjoyed support from a hawkish central bank. ![]()
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