Today on Tuesday (July 5th), the euro and the dollar opened at 1.0422, and closed at 1.0423 yesterday. So far, the highest has touched 1.0436 and the lowest has been 1.0417. Temporarily reported 1.0432, an increase of 0.08%. The British pound was temporarily reported at 1.2109, an increase of 0.06%; the Canadian dollar was temporarily reported at 0.7779, an increase of 0.11%.
In early Asian trading on July 5, Beijing time, the us dollar index fell slightly and is currently trading around 105.10. Fears of a global recession have kept the dollar higher, even as markets have tempered expectations for higher U.S. interest rates. markets are currently pricing in about an 85% chance of another 75bps rate hike this month, with rates expected to hit 3.25% to 3.5% by the end of the year, with a rate cut in 2023
Data on Friday showed euro zone inflation hit another record high, adding to the case for the European Central Bank to raise interest rates this month.
Markets are now pricing in a 25 basis point rate hike in July, but a rate hike of more than 25 basis points remains a problem.
Estonian central bank governor Muller said on Sunday: “Given the inflation outlook, it is appropriate to start raising rates by 25 basis points in July. We should continue to raise rates by 50 basis points in September.”
The ECB’s Vasle has said there could be more rate hikes in the fourth quarter after September. Beyond that, Vasle has been talking about inflation and the economy. He said the inflation problem was caused by the war because the EU was too dependent on Russia for energy. But on GDP , he said: “I don’t think there’s going to be a recession, in fact, I think there’s a chance of a surprise.” He added: “The service sector is booming and the labor market is tight.
Robert Holzmann said: “We will have to assess where the economy is going, and where inflation is going, and then there’s plenty of room to raise rates to the 0.25 and 0.5 levels that we think are reasonable.” The ECB’s Nagel said: “If monetary policy lags the situation , more aggressive rate hikes may be needed to keep inflation in check. That will have a higher economic cost.”