The U.S. Dollar Rises, Euro and Pound Sterling Fall in European Trade
Investing.com – The U.S. dollar saw gains in European trade on Thursday following hawkish remarks from a Federal Reserve official, while the euro and sterling faced pressure from weak economic data.
Dollar Strengthens on Waller’s Comments
The Dollar Index, tracking the greenback against a basket of currencies, rose by 0.3% to 104.320 at 05:30 ET (09:30 GMT), nearing its highest level since mid-February.
Fed Governor Christopher Waller’s speech at an Economic Club of New York event on Wednesday boosted the dollar. Waller emphasized the need to hold off on rate cuts, citing recent inflation data as support for maintaining the current policy stance.
Analysts at ING noted that Waller’s comments disappointed dollar bears, indicating a reluctance to cut rates amid ongoing concerns about inflation.
Euro and Pound Face Headwinds
The euro dropped by 0.3% to 1.0789, close to a five-week low, after Germany’s industrial production unexpectedly decreased by 1.9% in February, highlighting economic challenges in the region.
European Central Bank officials have adopted a dovish tone, with hints of possible rate cuts in the near future. Board member Piero Cipollone suggested interest rate adjustments as early as June, citing wage growth and inflation targets.
Meanwhile, the pound fell by 0.3% to 1.2603 after data confirmed the UK’s shallow recession in the previous year, with two consecutive quarters of negative growth.
Despite a slight uptick in January’s GDP growth, inflation concerns may prompt the Bank of England to consider rate cuts.
Yen Watch Amid Intervention Speculation
The yen traded higher at 151.41, following discussions in Japan about the currency’s weakness and potential intervention. Speculation is rising as authorities monitor the yen’s movements.
China’s handling of the yuan contributed to stability, with the currency pair remaining above 7.2. A strong midpoint set by the People’s Bank of China aimed to prevent further yuan depreciation.
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