The euro fell slightly in the European market on Thursday against a basket of global currencies, continuing its losses for the fourth consecutive day against the US dollar, as buying activity in the US currency as the best available investment, especially after US inflation data strengthened the likelihood of a US interest rate hike this year.
This comes as US President Donald Trump and Chinese leader Xi Jinping meet in the first official visit by a US president to China in nearly a decade, with attention focused on anticipated discussions about strengthening trade relations between the world’s two largest economies, as well as addressing complex geopolitical issues, most notably developments in the Iranian war and the future of navigation in the Strait of Hormuz and its impact on global energy markets.
Price overview
Euro exchange rate today: The euro fell against the dollar by less than 0.1% to ($1.1706), from today’s opening price of ($1.1711), and recorded a high of ($1.1719).
The euro ended Wednesday's trading down 0.25% against the dollar, its third consecutive daily loss, due to the stalled US-Iranian talks.
US dollar
The dollar index rose 0.1% on Thursday, maintaining its gains for the fourth consecutive session, reflecting the continued rise in the levels of the US currency against a basket of global currencies.
The dollar received additional support from rising U.S. Treasury yields, as investors bet that the Federal Reserve would raise interest rates at least once this year.
Data released this week in the United States showed that consumer prices rose in April at the fastest pace in three years, and producer prices rose at the fastest pace in four years, indicating renewed inflationary pressures on monetary policymakers at the Federal Reserve.
According to the CME Group's FedWatch tool, markets are currently pricing in a 31.8% probability of the Federal Reserve raising interest rates in December, up from just over 16% a week ago.
Trump-Xi meeting
The world's attention is focused on Beijing, where the historic meeting between US President Donald Trump and his Chinese counterpart Xi Jinping is taking place, amid efforts by Washington to achieve economic gains and maintain the fragile trade truce between the world's two largest economies, in addition to discussing complex geopolitical issues, most notably the US-Israeli war on Iran and its regional and international repercussions.
Trump is expected to seek China's help in pressuring Iran to reach a Middle East peace agreement, but analysts believe he is unlikely to get the support he wants.
European interest rate
With global oil prices rising this week, the money market's pricing of the likelihood of the European Central Bank raising European interest rates by about 25 basis points next June has increased from 45% to 50%.
In order to reprice the above probabilities, investors are awaiting further economic data from the Eurozone on inflation, unemployment and wage levels.
