U.S. Currency Finds Equilibrium Against the Euro
The U.S. currency stabilized Tuesday, May 10, against a basket of other major currencies, losing some of the momenta that propelled it to a new 20-year high Monday, May 9, on the eve of U.S. inflation data.
The U.S. dollar index, which compares the greenback to other major currencies, was up 0.15 percent at 103.80 points, after hitting a two-decade high of 104.19 points the previous day. The euro gave up 0.17 percent to $1.0544 per euro.
The U.S. dollar was galvanized by the Federal Reserve (Fed), which raised rates by half a point and signalled its willingness to do so again to counter inflation.
“The Fed isn’t going to blink until it sees inflation move away from its peaks, so tomorrow’s CPI data will be particularly closely watched,” warns analyst Neil Wilson.
“A measure that exceeds the market’s expectations” of 8.1% inflation, up from 8.5% in March, “could propel the dollar higher,” warns analyst Lukman Otunuga. “Given the amount of data on the U.S. economy and speeches by Fed officials scheduled for this week, the dollar’s volatility is likely to be increased,” he adds.
The European currency, which hit a five-year low in late April, appears to be stabilizing. “The euro is benefiting from the growing prospect of higher rates and the end of negative rates in the eurozone,” said Lee Hardman, an analyst.
The governor of the Central Bank of Finland, Olli Rehn, advocated Monday, May 9 a rise in interest rates in July, a proposal already advocated by other members of the monetary institute.