Euro climbs above $1.1 for first time in three months

Economies.com
2023-11-29 07:28AM UTC

Euro rose in European trade on Wednesday against a basket of major rivals, extending gains for the fifth straight session against the dollar and trading above $1.1 for the first time in three months as concerns fade about the widening interest rate gap between Europe and the US.

 

Now investors await European inflation data for November to gauge the likely path ahead for the ECB monetary policies. 

 

EUR/USD

 

EUR/USD rose 0.25% to 1.1017, the highest since August 11, with a session-low at 1.0990, after closing up 0.4% yesterday, the fourth profit in a row following bearish remarks by Federal Reserve officials. 

 

Fed member Christopher Waller, a usual hawk, said the Fed is on track to bring inflation back to the 2% target.

 

Such remarks bolstered the case for an early interest rate cut by the Federal Reserve next year, reducing the interest rate gap with the European Central Bank.

 

Interest Rate Gap

 

The current US-European interest rate gap stands at 100 basis points, the lowest since May 2022, and it's expected to shrink further in the first half of 2024.

 

Most European Central Bank officials ruled out early interest rate cuts in 2024 amid efforts to maintain tight monetary conditions throughout 2024. 

 

European Inflation Data

 

Later today, consumer prices data in Germany and Spain will be released, paving the way for euro zone inflation data tomorrow. 

 

ECB President Christine Lagarde repeatedly asserted the importance of data in determining the path ahead for European monetary policies, as the central bank aims at 2% inflation rates. 

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