Singapore, April 28 (BNA): The euro fell on Friday after economic data painted a mixed picture of growth and inflation across the eurozone, raising uncertainty about the size of the European Central Bank’s expected rate hike next week.
Preliminary data showed gross domestic product in the eurozone grew by 0.1% in the first quarter, below expectations in a Reuters poll of 0.2%.
The two largest economies in the eurozone, Germany and France, either stagnated or barely grew, while the Spanish and Italian economies expanded more than expected.
Reuters reported that the flood of inflation data was also mixed.
“The euro is under pressure today as core inflation data from France and Spain have not reached the burden of proof required to force the ECB to raise 50 basis points next week,” said Simon Harvey, Head of FX Analysis at Monex Europe.
The euro fell 0.4% to $1.0985, but remained near a one-year high, supported by expectations that the European Central Bank still has more work to do in raising interest rates, analysts said.
But after the economic data, traders increased their bets that the European Central Bank will raise 25 basis points, instead of 50, next week, according to Refinitiv data.
The International Monetary Fund called on the European Central Bank on Friday to continue raising interest rates until mid-2024 to help reduce soaring inflation.
Against the yen, the euro briefly rose to its highest level since December 2014 at 149.50. It last rose 1.2% to 149.35 yen after the Bank of Japan left its ultra-easy monetary policy unchanged even after scrapping its pledge to keep interest rates low.
The yen is at a 9-year low against the euro
At Governor Kazuo Ueda’s first policy meeting, the Bank of Japan said it would maintain ultra-low interest rates as expected, and unanimously decided not to make any changes to the Yield Curve Control (YCC) policy.
However, the central bank rescinded a pledge to keep interest rates at “current or lower levels” and said it would “conduct a comprehensive review of monetary policy”.
The yen also fell sharply against the US dollar, dropping 1.55% to 136.11, the lowest level since March 10th.
“Hopes for a policy change have been somewhat dampened by the review,” said Moh Seung Sim, a currency analyst at Bank of Singapore, adding that the potential length of the review may have dashed hopes of an imminent move in policy settings.
“For now, the outcome is read as pacifist.”
surgeries in US dollars
The US dollar rose broadly, drawing support from data pointing to inflation remaining flat in the US, boosting expectations of a 25 basis point rate hike at the FOMC meeting next week. .
The US Dollar Index rose 0.59% to 102.02, to a one-week high and rebounding from a nearly two-week low hit on Wednesday.
Data released on Thursday showed that while US economic growth slowed more than expected in the first quarter, consumer spending accelerated, which was accompanied by a rise in inflation.
Analysts at Societe Bank said: “The Fed is widely expected to rise again next week, but with inflation holding steady, we expect the Fed to remain on hold for the rest of the year, dashing hopes of a policy pivot in (the second half). )”. general.
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