FRANKFURT (dpa-AFX) – The price of the euro has stabilized in the middle of the week after its slide as a result of the US interest rate decision. The European common currency cost 1.0394 US dollars on Thursday morning. Immediately before the interest rate decision, it was quoted around a cent higher. The European Central Bank set the reference rate on Wednesday afternoon at 1.0496 (Tuesday: 1.0497) US dollars.
Advertising
Trade EUR/USD and other currencies with leverage via CFD (long and short)
Trade currency pairs like EUR/USD with leverage at Plus500 and participate in rising and falling prices.
Plus500: Please note the instructions5 about this advertisement.
The US Federal Reserve lowered its key interest rate for the third time in a row – but predicted fewer interest rate cuts than before for the coming year due to persistently elevated inflation. The prospect of a less loose monetary policy in the USA had boosted the dollar and weighed on the euro accordingly.
However, from the perspective of the foreign exchange market, the Fed’s increase in inflation forecasts was more important, wrote analyst Volkmar Baur from Commerzbank. This aspect in particular came into focus during the press conference following the interest rate decision. The head of the central bank, Jerome Powell, left the impression that inflation was once again the main focus of the central bank. While the labor market is considered to be in good shape, according to Baur, we would need to see further progress in inflation in order to further reduce interest rates. However, the forecasts do not indicate such progress.
The Japanese yen came under pressure against all other major currencies given the Bank of Japan’s monetary policy decisions and statements. The Japanese central bank once again did not change its monetary policy. The key interest rate remains at 0.25 percent. Only a slim majority of economists surveyed by the Bloomberg news agency had expected the Bank of Japan to leave its key interest rate unchanged for the third time in a row and not to raise it.
Statements by central bank chief Kazuo Ueda at the subsequent press conference put additional pressure on the yen. The Japanese currency fell to its lowest level since July against the US dollar. Ueda emphasized that he would have to wait and see the dynamics of the next collective bargaining negotiations in the spring. The comments raised doubts about whether the Japanese central bank will raise interest rates as early as January./la/jsl/stk