The euro rose in the European market on Monday against a basket of global currencies, moving in the positive zone at the beginning of the week’s trading, with recovery operations continuing for the second day in a row from the lowest level in a week against the US dollar, thanks to recent comments issued by European Central Bank officials.
Those comments revived the prospect of another increase in European interest rates before the end of this year, and dampened speculation about ECB interest rate cuts early next year.
Euro exchange rate today
The euro rose against the dollar by approximately 0.1% to $1.0690, from the opening price of $1.0683, and recorded today’s lowest level at $1.0680.
On Friday, the euro achieved a 0.2% rise against the dollar, the second gain in the last three days, after recording earlier in trading the lowest level in a week at $1.0656.
European comments
President of the Central Bank of Ireland and member of the Board of Directors of the European Central Bank, Gabriel Makhlouf, said last week: Further raising of interest rates in the euro zone should not be ruled out, something that the markets do not expect at all.
President of the German Central Bank and member of the Board of Directors of the European Central Bank, Jochem Nagel, said that the final stage of achieving the inflation target of 2% may be the most difficult, and that it is too early to talk about lowering interest rates.
Austria's Central Bank Governor and member of the European Central Bank's Governing Council, Robert Holzmann, said that the central bank must remain vigilant about inflation, and be prepared to raise interest rates again if necessary, and warned that interest rates will not be cut anytime soon.
These statements renewed hopes about the possibility of another increase in European interest rates, but this increase remains directly linked to inflation and price developments in the euro zone.
Expectations
Jane Foley, chief strategist at Rabobank, said: While the market is focusing on the possibilities of interest rate cuts from (G8 major central banks) next year, many relevant central bank governors oppose this speculation.
Foley added: As long as inflation remains above target, policymakers will likely want to keep the risk of further tightening alive, especially since a significant decline in market prices could exacerbate inflationary risks.
UniCredito Bank analyst Francesco Di Bell said: Markets remain tense after a number of European Central Bank and Federal Reserve officials said that further monetary tightening is still possible if necessary.
