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Forex: Euro holds gains ahead of US inflation data

Wednesday, 01/12/2022 13:30 from

dpa-AFX

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Banknotes of different currencies (icon image). pexels.com

FRANKFURT (dpa-AFX) – The euro rate has barely moved ahead of eagerly anticipated US economic data. The common currency hovered in a tight range around the previous evening’s level on Wednesday and was last traded at $ 1.1364. The European Central Bank set the reference rate on Tuesday at 1.1336 (Monday: 1.1318) dollars (dollar rate).

The euro benefited from the renewed confidence in the financial markets on Tuesday. In contrast, the prospect of a tighter US monetary policy seems to have already been partially priced into the exchange rates.

Nonetheless, in the afternoon, attention will be focused on US inflation data. Experts expect consumer prices to rise by 7.0 percent in December compared to the same month last year.

However, it would take a massive surprise for the interest rate picture that the market is making of the US to seriously shake, wrote foreign exchange expert Ulrich Leuchtmann from Commerzbank (Commerzbank share). The fact that the US Federal Reserve will raise its key interest rate quickly seems to be a foregone conclusion, even if inflation is slightly lower than expected. “In the worst case, it won’t be March, but May or June,” the expert concluded.

And ultimately, according to the Commerzbank expert, the foreign exchange market is about whether the Fed will significantly increase its key interest rate in the next few quarters and years. A quick rate hike is an indicator for this, but not a basic condition.

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