Euro Remains Dominant As the Dollar Advances in a Ranging Market

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The recent spike in euro and euro inflation is only temporary, according to European Central Bank (ECB) executive board member Isabel Schnabel, who spoke to German broadcaster ARD on Thursday morning. “This means we will keep financing conditions favorable to support the economy.” “There is no reason for an interest rate hike at the moment.” Note that amid a rally in commodities prices, the bloc’s inflation is approaching the central bank’s 2% target.

Today’s forex markets are relatively calm, with most big pairs and crosses remaining within yesterday’s range. The dollar is losing some of its post-FOMC minutes’ gains, while the pound is also losing ground. The Australian and New Zealand Dollars, on the other hand, are also recovering slowly. The Euro is the dominant currency this week, followed by the Yen and the Pound. The worst currency is the New Zealand dollar, which is followed by the Australian dollar and the US dollar.

In the week ending May 15, initial jobless claims in the United States fell by 34,500 to 444,500, well below the 450,500 anticipated. It’s still at its lowest point since March 14, 2020. Continuing claims increased by 111 thousand to 3751 thousand. Also from the United States, the Philadelphia Fed manufacturing index fell to 31.5 in May from 50.2, falling short of expectations of 40.8.

After the FOMC Minutes, the Dollar Recovers Against the EURO

As the US dollar reverses losses fueled by the FOMC minutes, the EUR/USD is trading about 1.2190, up 0.15 percent. On Wednesday, the Fed hinted at tapering bond purchases, causing the US dollar and yields to rise sharply.

Mild risk aversion and some subtle hawkish twists in FOMC minutes helped the dollar recover overnight. However, it has yet to break through any near-term technical standard. At this point, the Euro is still the strongest currency for the week, followed by the Yen. Commodity currencies are generally weaker, while the Australian dollar does not benefit from weaker-than-expected job numbers. The drop in oil prices also weighed down the Canadian Dollar.

“Some participants indicated that if the economy were to make rapid progress toward the Committee’s targets, it could be necessary at some stage in upcoming meetings to begin exploring a timetable for changing the rate of asset purchases,” according to the FOMC minutes published overnight.