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Euro clings to equilibrium as traders wait for US inflation – SABC News

The euro hovered above the dollar’s equilibrium on Wednesday ahead of US inflation figures, as traders were wary of sky-high reading could force it into a slump that has not been seen for decades.

Markets are also on alert for a surprise from the Central Bank of New Zealand, which sets the policy at 0200 GMT, as economists expect a 50 basis point rise in interest rates.

The New Zealand dollar, which hit a two-year low of $ 0.6097 on Monday and rose to $ 0.6119 in initial trading, is vulnerable to further depreciation if the central bank’s statement focuses more on risk growth rather than inflation.

However, the single currency has fallen by almost 12% this year and dropped to $ 1,0005 on Tuesday as war on the eastern edge of Europe has triggered an energy crisis that has hurt the continent’s economic growth prospects. It last bought $ 1.0030.

Economists forecast that US inflation rose to 8.8% year-on-year in June, a 40-year high that is likely to bolster expectations of interest rate hikes in response to and help the dollar in a market that is nervous about both interest rates and growth.

“I think the US dollar will continue to rise if the US consumer price index is stronger than expected,” said Joe Capurso, a Commonwealth Bank of Australia strategist in Sydney.

“There is definitely a very good chance that the euro will fall below equilibrium tonight.

The euro already fell below the balance of the Swiss franc last month, flirting with falling below its 200-day moving average against the pound.

Weaknesses in the euro and yen have boosted the US dollar and peaked in two decades at 108,560 this week, hovering at 108,220 in the first trading session on Wednesday.

The Japanese yen has made a breakthrough this year, with the Bank of Japan sticking to its super-easy monetary policy as opposed to restraint almost everywhere else.

It was under pressure at 136.95 dollars on Wednesday after reaching its lowest level since 1998 on Monday at 137.75.

The Australian dollar fell 0.2% to 0.6746 dollars, just above the two-year low of 0.6712 dollars on Tuesday.

Sterling has also fallen on a stronger dollar and analysts see it drifting following the resignation of British Prime Minister Boris Johnson last week.

It last bought $ 1.1877, with GDP data at 0600 GMT next hurdle, as traders expect May to have zero growth.

Eight conservatives are vying to succeed Johnson.

“The combination of slow growth, debt and high inflation is likely to be very difficult for Tory’s new leadership,” said Jane Foley, chief executive of Rabobank.

“Despite the fact that large-scale investors will be hoping for a government that is less distracted by scandals and focuses more on reconciling the economy after Brexit, the jury is still out. “Sterling could face a lack of new policies until the new prime minister takes office.

The South Korean won was slightly stiffer in morning trading after the central bank raised interest rates by 50 basis points, in line with market expectations.

In Wellington, where the Central Bank of New Zealand has been accustomed to surprising markets, investors are fairly certain that a rise is imminent and focus on the tone of the statement.

“Our dovetail scenario includes a 50-point increase and a statement that highlights the risks to the global economy,” said Imp Speizer, a Westpac analyst, which he expects could lower the kiwi by half a cent and push interest rates down in the near future.

Euro clings to equilibrium as traders wait for US inflation – SABC News

Source link Euro clings to equilibrium as traders wait for US inflation – SABC News

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