• Reduced prospect of US interest rate cuts
The euro fell in the European market on Friday against a basket of global currencies, extending losses for the fourth consecutive day, moving away from a seven-month high, as corrections and profit-taking continued, in addition to renewed concerns about the interest rate gap between Europe and the United States.
After hot inflation data in Europe reduced the odds of the European Central Bank cutting interest rates by about 25 basis points in September, strong data on the US labor market reduced the odds of the Federal Reserve cutting interest rates by about 50 basis points in September.Price outlook • Euro exchange rate today: The euro fell against the dollar by about 0.1% to ($1.0911), from the opening price of trading at ($1.0919), and recorded a high of ($1.0929).
• The euro ended Thursday’s trading down less than 0.1% against the dollar, in the third consecutive daily loss, as corrections and profit-taking continued from a seven-month high of $1.1008.Inflation in EuropeRecent consumer price figures in Europe were higher than market expectations during July, in the latest data indicative of entrenched inflationary pressures on the European Central Bank.
That data, coupled with aggressive comments from some monetary policymakers at the European Central Bank, has reduced the existence of additional cuts in European interest rates this year.
European interest ratePricing the possibilities of the European Central Bank cutting interest rates at the next September meeting below 50%, waiting for more data that shows the evolution of growth and inflation levels in the euro area during the coming period.
Read also:Turkish lira reaches this level after inflation expectations remain stable until the end of the year
U.S. labor market, data showed on Thursday that government jobless claims fell by 17,000 to 233,000 seasonally adjusted for the week ended Aug. 3, the biggest drop in nearly 11 months, and economists had expected 240,000 new applications.
According to CME Group’s FeedWatch: the pricing of US interest rate cut prospects fell by about 50 basis points at the September meeting from 72.5% to 56.5%, and the pricing of cut prospects rose by about 25 basis points from 27.5% to 43.5%.
The interest rate gap between Europe and the US is currently at 125 basis points in favor of US interest rates.With the current prospects around European and US interest rates, the gap is expected to narrow only to 100 basis points in September.
• We expect here in the ‘FX News Today’ website:
The euro will continue to move in negative territory within the downward correction cycle in the intraday against the US dollar, waiting for the release of more economic data in Europe and the United States in the coming period.
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