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On Monday, February 9th, the German DAX 30 index closed up 284.52 points, or 1.15%, at 25004.32; the UK FTSE 100 index closed up 15.84 points, or 0.15%, at 10385.59; the French CAC 40 index closed up 49.44 points, or 0.60%, at 8323.28; the Euro Stoxx 50 index closed up 60.96 points, or 1.02%, at 6059.36; the Spanish IBEX 35 index closed up 244.61 points, or 1.36%, at 18187.91; and the Italian FTSE MIB index closed up 923.30 points, or 2.01%, at 46800.50.February 10th - European Central Bank (ECB) Governing Council member Jean-Claude Nagel stated that the ECBs current policy interest rate is at an appropriate level, and inflation, after a brief dip, is expected to stabilize near the 2% target. The ECB unanimously decided last week to keep its main interest rate unchanged at 2%, but some policymakers remained concerned that inflation, which had slowed to 1.7% last month, might weaken further, forcing the Eurozone central bank to take action. Nagel stated that the ECB would only intervene if medium-term inflation expectations deviated "persistently and significantly" from the target, but this does not appear to be the case at present. He said, "Several factors suggest that the current interest rate level is appropriate. First, the (inflation) below target is short-term and limited in magnitude; in the medium term, inflation remains at our target level." He added that long-term inflation expectations are "firmly anchored," and core inflation indicators support this assessment, as does the latest update to the ECBs December forecasts.The US 3-month Treasury auction ended February 9th with a winning yield of 3.6%, compared to 3.60% previously.The bid-to-cover ratio for the US 3-month Treasury bond auction as of February 9 was 2.76, compared to 2.81 previously.The US auction of 6-month Treasury bonds ending February 9th yielded a winning bid of 3.5%, compared to 3.53% previously.

The EUR/USD Declines toward 1.0500, with US Inflation and ECB Lagarde in the Spotlight

Alina Haynes

May 09, 2022 10:10

The EUR/USD fell below 1.0530 and is likely to test the psychological support level of 1.0500. After Monday's opening bid, the value of the asset is continuing to decline. As of now, a bearish open trend has been noticed, and the index is attempting to challenge its bottom from the previous week at 1.0483.

 

Euro bulls are anticipated to stay volatile this week ahead of Wednesday's speech by Christine Lagarde of the European Central Bank (ECB). Lagarde's statement will shed light on the expected monetary policy action taken by the ECB in June. Notable is the fact that the ECB left its interest rates constant in its most recent announcement regarding interest rates. Until the end of its bond-buying program, which is anticipated for the third quarter, the European Central Bank (ECB) has mandated that policy rates would remain constant. Consequently, investors should not anticipate a rate increase from the ECB before the end of the year. In addition, fears of stagflation in the eurozone following the Ukraine crisis have diminished the likelihood of the ECB adopting a hawkish tone.

 

In the meantime, the US dollar index (DXY) transforms any corrective downturn into an ideal purchasing opportunity for market participants. The DXY is robust as the probability of a June rate hike by the Federal Reserve (Fed) rises. At the time of publication, the DXY has risen above 130.90 and is inching closer to recapturing last week's peak of 104.06.

 

Aside from ECB Lagarde's speech, investors are focusing on Wednesday's release of US inflation data. A preliminary estimate for annual US inflation is 8.1 percent, down from the previous estimate of 8.5 percent. 

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