FRANKFURT (dpa-AFX) – The euro practically stood still on Monday in a calm environment. The common currency was trading at $1.0772 around midday, barely higher than before the weekend. The European Central Bank (ECB) set the reference rate at $1.0780 on Friday afternoon.
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Several major events are on the agenda this week. Investors are likely to focus primarily on interest rate decisions by the three major central banks in the US, the euro area and Japan. The US Federal Reserve is heading for an interest rate pause. After its two-day monetary policy meeting, it was not allowed to announce a rate hike on Wednesday for the first time in over a year.
“Whether the dollar can defend its gains of the past few weeks will depend heavily on how clearly the Fed keeps the door open for further rate hikes and of course also on whether and if so how clearly the ECB closes the door for further rate hikes on Thursday.” , wrote currency analyst Esther Reichelt from Commerzbank. Experts expect that the European Central Bank will raise interest rates again by 0.25 percentage points.
Meanwhile, the Turkish lira hit another record low against the dollar. Turkey’s current account deficit widened unexpectedly in April, putting additional pressure on re-elected President Recep Tayyip Erdogan’s new economic team to act. Since Friday, Hafize Gaye Erkan, a former US banker, has been part of this team. The market is expecting a move away from the low interest rate policy in order to combat high inflation. In addition, the lira had been kept artificially stable for a long time by selling dollar holdings. According to observers, these are almost used up./la/jsl/jha/