Euro Falls On ECB's Dovish Stance On Rates
The euro weakened against its major counterparts in the European
session on Friday, as European Central Bank President Christine
Lagarde appeared to push back against market expectations that
growing price pressures could lead to a rate hike by next year.
At her press conference in Frankfurt, Lagarde said that although
the current phase of higher inflation would last longer than
originally expected, the Governing Council expects it to decline in
the course of next year.
"Our analysis certainly does not support that the conditions of
our forward guidance are satisfied at the time of liftoff as
expected by markets, nor any time soon thereafter," Lagarde told
reporters on Thursday.
The money markets are pricing in the probability of a 20-basis
point hike by December 2022, but Lagarde said that view is at odds
with the bank's economic outlook.
Flash data from Eurostat showed that Eurozone inflation
accelerated sharply to the highest since 2008 on higher energy
Inflation rose to 4.1 percent in October from 3.4 percent in
September. This was also faster than the economists' forecast of
3.7 percent. A similar higher rate was last registered in July
The euro weakened to more than a 1-year low of 1.0612 against
the franc, from a high of 1.0655 hit at 8 pm ET. The euro is poised
to challenge support around the 1.03 mark.
The euro dropped to 0.8446 against the pound, 1.1645 against the
greenback and 132.40 against the yen, off its prior highs of 0.8473
and 1.1690 and an 8-day high of 132.92, respectively. The next
possible support for the euro is seen around 0.83 against the
pound, 1.13 against the greenback and 130.00 against the yen.
The euro edged down to 1.4365 against the loonie, 1.6206 against
the kiwi and 1.5448 against the aussie, pulling back from its
previous 2-day high of 1.4442, 4-day highs of 1.6286 and 1.5526,
respectively. The euro is seen finding support around 1.42 against
the loonie, 1.59 against the kiwi and 1.51 against the aussie.
Looking ahead, Canada GDP data for August and industrial product
price index for September, as well as U.S. personal income and
spending data for the same month and University of Michigan's final
consumer sentiment index for October are scheduled for release in
the New York session.
Euro vs Yen (FX:EURJPY)
From Dec 2021 to Jan 2022
Euro vs Yen (FX:EURJPY)
From Jan 2021 to Jan 2022