Monex Europe head of FX analysis Simon Harvey reckons, "the data will push back against the idea they can hike again in September".Įuro zone business showed shrank much more than expected in July as demand in the bloc's dominant services industry declined, data this week showed.Ī euro level of $1.10, Harvey said, seemed fair. He was referring to the Swiss National Bank and a Swiss franc up over 7% against the dollar so far in 2023.īut with the jury very much out on whether the ECB will move again in September, the currency could as easily head down as back up, analysts said. "Currency strength is welcome to battle inflation, it's why the SNB for example does not mind about the franc," said Societe General currency strategist Kenneth Broux. Sandrini said Amundi expected the euro to rise to $1.15- $1.20 in the coming quarters, implying a further gain of at least 4% from current levels.įurther euro gains were not expected to unsettle policymakers since this would help keep the costs of imports - and overall inflation - down. we'll probably embark on a reversal like we are seeing already underway in the U.S., but that's not a moment yet." "This is going to happen but only when inflation peaks. "I'm a little sceptical of markets thinking that they (ECB policymakers) will twist at this point into a more dovish position," said Francesco Sandrini, head of multi-asset strategies at Amundi, Europe's largest asset manager. July euro zone inflation numbers are out next week. The path ahead was expected to be foggy over the summer as the market awaits new ECB inflation projections in September, fresh data, and assesses the Fed outlook. Speculators had the biggest net long position in the euro in nine weeks in the week ended July 18, CFTC data showed. That is partly because of weakness in the yuan, which accounts for over 10% of the basket, and has been hurt by a lacklustre Chinese economy. The currency is up roughly 10% from lows hit last year below the psychologically key $1-mark.Ī trade-weighted index, that measures the euro's value against a basket of other currencies and is followed closely by the ECB, is trading near record highs. inflation points to peak Fed rates, helps explain the euro's recent rally.
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