On Thursday (June 30), the EURUSD opened at 1.0440 and closed at 1.0442 yesterday. As of now, the highest has touched 1.0447 and the lowest has been 1.0435. Temporarily reported 1.0438, down 0.04%. The British pound was temporarily reported at 1.2192, an increase of 0.07%; the Canadian dollar was temporarily reported at 0.7753, an increase of 0.02%.
The euro was last down 0.74% at $1.044. The European Central Bank is widely expected to follow its global peers in raising interest rates for the first time in a decade in July, as soaring inflation cools, though economists are divided on the magnitude of the hike. That makes investors nervous. European Central Bank President Christine Lagarde said on Wednesday that the pre-pandemic era of ultra-low inflation was unlikely to return and that the central bank needed to adapt to sharply higher price growth expectations.
Capital Economics: Falling German inflation will not change the need for ECB rate hikes;
The fall in German inflation in June largely reflects temporary factors that will not change the ECB’s consensus that it needs to raise interest rates quickly, Jessica Hinds, senior European economist at Capital Economics, said in a note. The main driver of the decline in headline inflation was service sector inflation, which fell from 2.9% to 2.1% in Germany as a whole. Hinds said this reflected two short-term policy measures for three months from June 1: the issuance of 9 euros a month for public transport tickets and a fuel tax cut. These measures should keep inflation low until the end of August
Lagarde: You haven’t mentioned energy for so long. We have been, are, and will likely continue to suffer from energy problems, and it is not Europe’s own problem. But on the other hand, despite inflation and supply chain problems, Europe is also in a state of economic recovery, including strong indicators such as household deposits. In the face of uncertainty, the ECB will initially adopt an “incremental” strategy, but as the situation becomes clear, subsequent policies will be more selective.