- The EUR / USD slump at 1.1600 threatens to push the single currency to new yearly lows.
- Market risk sentiment weighs on safe-haven currencies such as the US dollar.
- The members of the ECB agree with the upward pressures of inflation as “transitory”.
- Fed Forecast: Inflation appears to be the latest due to supply chains.
- Fed’s Daly: Bottlenecks are the main cause of rising prices.
The EUR/USD it plummets during the New York session, trading at 1.1588, down 0.04% at the time of writing. At the beginning of the Asian session, the single currency rose to a new weekly high at 1.1624, recovering the thresholds of 1.1600. However, when European traders came to their desks, the euro fell aggressively, and sellers pushed the pair below 1.1600.
Market risk sentiment has kept safe-haven currencies like the US dollar under pressure. Riskier currencies like AUD, CAD, and NZD outperform the dollar. However, the current divergences between the European Central Bank and the Federal Reserve, ready to begin the gradual reduction of bonds, weigh on the shared currency.
During the European session, some members of the ECB crossed the wires. Klass Knot said the inflation outlook for the euro zone is back on track. In the same vein, Christine Lagarde, president of the European Central Bank, said that they continue to believe that the rise in inflation is largely due to temporary factors.
That said, most ECB policymakers seem to adhere to the “transitional” narrative, contrary to what members of the Federal Reserve have recently expressed.
Across the pond on Thursday, Atlanta Federal Reserve Chairman Raphael Bostic said inflation appears to be the latest wish due to supply chain and labor shortages. In the same vein, and at the same time, the president of San Francisco, Mary Duly, said that bottlenecks are the main cause of the increase in prices. He added that inflation would decline as the COVID-19 crisis improved.
Initial US jobless claims rose to 293,000 better than the 319,000 expected
On the European economic agenda, there is nothing to report. As for the US, Initial Unemployment Claims rose to 293,000 better than the 319,000 predicted by analysts, sending positive news on the job market. In addition, the US producer price index increased 8.6% less than the estimated 8.7%, while excluding food and energy, it expanded 6.8% below the 7.1% expected.