Forex analytics and overview

ECB Set to Continue Fight Against Inflation

2023.06.01 10:39

FxPro Financial Services Ltd

The euro is hovering around the $1.07 level, barely recovering above that mark on Thursday morning despite a sharper-than-expected drop in .

Euro area inflation cools more than expectedEuro area inflation cools more than expected

Eurostat’s preliminary estimate showed a decline in annual inflation in May to 6.1% from 7.0% in April. Economists had forecasted a smaller decrease to 6.3% y/y. Core inflation, which excludes volatile energy and food prices, also slowed down from 5.6% to 5.3%, confirming a downward trend.

Earlier statistics from other indicators and CPI data from the major countries suggested similar outcomes, but it is still helpful to have confirmation from the consolidated data.

However, we would like to stress that in these critical times, the regulator’s perception of these facts is more important than the facts themselves. As the statistics were released, ECB President Lagarde reaffirmed in her speech in Hannover that she wanted to continue the cycle of further rate hikes.

She also said that it needed to be clarified whether the already implemented hikes were enough. The hawkish stance of the ECB is also supported by data from the labour market, where the unemployment rate fell to 6.5% in April, the lowest level since 1993. The tight labour market could create additional price pressures despite falling energy prices and slower growth in food prices.

Euro Area unemployment rate at all 6.5% in April, all-time lowEuro Area unemployment rate at all 6.5% in April, all-time low

A strong labor market and a hawkish ECB attitude favor the single currency. We also note that the ECB only has a mandate for an inflation target, while the Fed must maintain maximum employment.

The euro area may be less sensitive to monetary policy than inflation in the US. This was evident in higher rates than in the US before 2008 and lower rates afterward. Zero-rates era is over, so we expect a return of positive key rate differentials between Europe and the US in the coming years.

The FxPro Analyst Team

Source link

Related Articles

Back to top button
bitcoin
Bitcoin (BTC) $ 95,367.55 0.81%
ethereum
Ethereum (ETH) $ 3,292.71 0.99%
tether
Tether (USDT) $ 1.00 0.06%
xrp
XRP (XRP) $ 2.17 2.27%
bnb
BNB (BNB) $ 662.04 0.78%
solana
Solana (SOL) $ 181.46 0.88%
dogecoin
Dogecoin (DOGE) $ 0.311725 0.27%
usd-coin
USDC (USDC) $ 1.00 0.21%
staked-ether
Lido Staked Ether (STETH) $ 3,289.33 0.94%
cardano
Cardano (ADA) $ 0.881955 0.72%
tron
TRON (TRX) $ 0.246447 0.65%
avalanche-2
Avalanche (AVAX) $ 36.17 3.37%
chainlink
Chainlink (LINK) $ 22.45 2.18%
the-open-network
Toncoin (TON) $ 5.40 1.91%
wrapped-steth
Wrapped stETH (WSTETH) $ 3,919.11 0.75%
wrapped-bitcoin
Wrapped Bitcoin (WBTC) $ 95,153.49 0.84%
shiba-inu
Shiba Inu (SHIB) $ 0.000021 0.21%
sui
Sui (SUI) $ 4.25 4.28%
stellar
Stellar (XLM) $ 0.352818 0.25%
polkadot
Polkadot (DOT) $ 6.87 0.95%
hedera-hashgraph
Hedera (HBAR) $ 0.266358 5.88%
weth
WETH (WETH) $ 3,291.79 1.06%
hyperliquid
Hyperliquid (HYPE) $ 27.07 18.74%
bitcoin-cash
Bitcoin Cash (BCH) $ 440.66 1.98%
leo-token
LEO Token (LEO) $ 9.40 0.84%
uniswap
Uniswap (UNI) $ 13.72 1.64%
litecoin
Litecoin (LTC) $ 101.93 2.23%
pepe
Pepe (PEPE) $ 0.000018 2.08%
wrapped-eeth
Wrapped eETH (WEETH) $ 3,478.21 0.97%
near
NEAR Protocol (NEAR) $ 5.06 2.14%
ethena-usde
Ethena USDe (USDE) $ 1.00 0.11%
bitget-token
Bitget Token (BGB) $ 4.11 0.51%
usds
USDS (USDS) $ 0.998088 0.04%
aptos
Aptos (APT) $ 9.08 3.34%
aave
Aave (AAVE) $ 323.18 9.29%
internet-computer
Internet Computer (ICP) $ 9.98 0.28%
crypto-com-chain
Cronos (CRO) $ 0.153255 1.31%
polygon-ecosystem-token
POL (ex-MATIC) (POL) $ 0.473236 0.18%
mantle
Mantle (MNT) $ 1.17 2.81%
ethereum-classic
Ethereum Classic (ETC) $ 26.08 0.78%
vechain
VeChain (VET) $ 0.045687 1.51%
render-token
Render (RENDER) $ 7.01 0.82%
whitebit
WhiteBIT Coin (WBT) $ 24.49 0.78%
monero
Monero (XMR) $ 187.03 2.01%
mantra-dao
MANTRA (OM) $ 3.62 0.32%
dai
Dai (DAI) $ 1.00 0.09%
bittensor
Bittensor (TAO) $ 453.39 0.22%
fetch-ai
Artificial Superintelligence Alliance (FET) $ 1.26 0.25%
arbitrum
Arbitrum (ARB) $ 0.749567 0.93%
ethena
Ethena (ENA) $ 1.03 1.12%