Monex: EUR/USD op laagste punt in drie maanden

Monex: EUR/USD op laagste punt in drie maanden

Currency
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Hieronder volgt een kort commentaar in het Engels van Ima Sammani, valuta analist bij Monex Europe op de Amerikaanse dollar, euro en het Britse pond.

EUR
Most of the euro’s price action from yesterday was a result of the USD swings as idiosyncratic factors affecting the euro remain light. With the dollar benefiting from a US CPI number and low demand at the 30-year Treasury bond auction, EURUSD fell to three-month lows before paring back some of its losses this morning. Domestically, increasing Covid-19 cases in the eurozone found their way to news headlines as cases in the Netherlands surged more than six-fold in the past week, while the rate in France increased by 60% in the past week as well. German Chancellor Angela Merkel reinforced the government’s urgent appeal for people to get vaccinated, while France is preparing a new law to make Covid vaccinations compulsory for health care workers. Despite these virus-driven headlines, the euro’s performance did not differ significantly from most G10 currencies vs the dollar. Today's focus turns to the European Central Bank’s Isabel Schnabel who speaks at Peterson Institute about the challenges of the low interest rate era.

 
USD
The dollar index (DXY) rose by over 0.7% over the course of yesterday after hitting a session low in the morning, as stronger-than-expected consumer price index figures and an increase in yields at the back-end of the yield curve supported the currency. June’s CPI figures significantly beat expectations for both the core and headline reading in both the year-on-year and month-on-month figures. The consensus foresaw an increase in YoY price growth from 5% in May to 4.9% in June, whereas the core reading, which excludes food and energy costs, printed at 4.5% vs the consensus of 4.0%. The dollar rally ran out of steam for a brief period when investors dived into the details of the report which showed that most of the price increases were linked to reopening effects before the results of the 30-year bond auction came in which drove up longer-term yields. The CPI figures, which led to a stronger dollar, suggest markets have become more sensitive to data since June's Federal Reserve meeting, which included individual interest rate projections in the form of the dot plot that suggested two rate hikes over 2023 as opposed to none previously. In order for investors to fully buy the hawkish Fed shift, more concrete signalling from the Federal Reserve will be needed to gauge their reaction function, and for that, the Fed requires improvements in labour market data. After the CPI release, a lack of demand at the 30-year Treasury bond auction resulted in higher 30Y yields, which led to the dollar resuming its rally. For today, all eyes are on Fed Chair Jerome Powell who will testify before the House Financial Services Committee today to deliver the semi-annual monetary policy report to Congress at 18:00 CET.

 
GBP
Sterling’s price action was dominated by USD moves throughout yesterday as US CPI data and weak auction demand supported the dollar, but the pound saw a larger rebound this morning compared to many other G10 currencies after June’s CPI figure from the UK showed a broad-based increase.