EUR/USD rises toward 1.1050 due to dovish Fedspeak
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EUR/USD advances further due to dovish comments by the Fed officials. San Francisco Fed President Mary Daly emphasized that the US central bank should reduce rates gradually. The Euro receives support as ECB policymakers have hesitated to commit to a specific rate-cut path. EUR/USD extends its gains for the second successive session, trading around 1.1030 during the Asian hours on Monday. The upside of the pair could be attributed to the rising odds of an interest rate cut by the US Federal Reserve (Fed) starting in September. Last week’s US economic data indicated that Retail Sales exceeded expectations, while both the Producer Price Index (PPI) and Consumer Price Index (CPI) suggested that inflation is easing. Additionally, US housing starts dropped by 6.8% in July to 1.238 million units, following a 1.1% increase in June, marking the lowest level since 2020. This decline has heightened concerns about the economy’s resilience, particularly in light of recent softer inflation and labor reports. Federal Reserve Bank of San Francisco President Mary Daly emphasized on Sunday that the US central bank should take a gradual approach to reducing borrowing costs, according to the Financial Times. Daly pushed back against economists’ concerns that the US economy is on the verge of a sharp slowdown that would justify rapid interest rate cuts. Additionally, Federal Reserve Bank of Chicago President Austan Goolsbee warned that central bank officials should be cautious about keeping a restrictive policy in place longer than necessary. While it’s uncertain whether the Fed will cut interest rates next month, failing to do so could harm the labor market, per CNBC. In the Eurozone, investors anticipate that the European Central Bank (ECB) will gradually reduce interest rates. ECB policymakers have hesitated to commit to a specific rate-cut path due to concerns that price pressures could reaccelerate.…
Filed under: News - @ August 19, 2024 1:05 am