The euro plummeted on Friday. What about the dollar?
The common currency traded in the red on Friday. The eurozone economic data came out mixed, causing some market confusion. Investors are contemplating the European Central Bank’s next move. They initially expected the bank to hike its interest rates at its meeting next week, but it seems market players are no longer sure that the ECB will deliver the increase.
New data showed that the eurozone’s GDP expanded by 0.1% in the first quarter of 2023. That is less than analysts expected, with polls showing that they bet on at least 0.2% growth. Moreover, in Germany and France, the two largest economies in Europe, economic growth slowed considerably, especially after domestic consumption decreased over the recent months. On the other hand, Spain and Italy reported more growth than forecasted initially.
Carsten Brzeski, ING Global Head of Macro, noted that such contradictory news would make the ECB’s task more difficult. The inflation data were also mixed, causing the euro to tumble by 0.4% to $1.0986 on Friday. Despite the drop, the currency still traded near its one-year peak hit recently.
The euro gained almost 1.3% in April overall, mainly thanks to the expectations that the European Central Bank would keep raising its interest rates. On Friday, the International Monetary Fund advised the central bank to continue its policy tightening until the middle of 2024 at least.
The euro also rallied against the Japanese yen. It surged to its highest level since December 2014 briefly, exchanging hands at 149.50 yen. However, the currency traded at 1.2% at 149.42 yen at last. The Bank of Japan maintained its ultra-easy monetary policy, much to traders’ frustration.
How is the yen faring now?
The Japanese currency plunged against the US dollar, hitting its lowest since March 10. It shaved off 1.55% to 136.11 USD on Friday. The BOJ announced that it would continue with the dovish course on its first policy meeting with Kazuo Ueda as governor. Still, the bank also promised that it would review its monetary policy soon.
Meanwhile, the greenback surged forward, supported by the new data that showed that inflation remains high in the United States. Investors expect the Fed to deliver another rate hike. Consequently, the US dollar index jumped by 0.59% to 102.02 on Friday. It skyrocketed to a one-week peak, recovering losses suffered on Wednesday when it dropped to an almost two-week.
On Friday, the Russian rouble climbed higher in early trading. Traders are waiting for Russia’s central bank decision. The rouble exchanged hands at 81.1275 versus the dollar, higher than the 81.3325 reached on Thursday.
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