(New York) The dollar continued its surge on Friday, supported by offensive remarks from a member of the Federal Reserve (Fed), while the euro suffered from doubts about the ability of the ECB to tighten its monetary policy further.
At 5 p.m. (Eastern time), the greenback took 0.61% against the single European currency, at 1.0849 dollars for one euro, the highest for more than a month.
Fed Governor Michelle Bowman said on Friday that if inflation remained high in the United States and the labor market “tight”, continued monetary tightening “would be appropriate” to stem the surge in prices.
According to the central banker, the latest indicators did not provide “lasting evidence” that “inflation (was) on a downward slope”.
Operators have recalibrated their projections and now attribute a non-negligible probability (22%) to a further rate hike at the next Fed meeting on June 13-14, an ultra-minority assumption a month ago.
In support of Governor Bowman’s concerns, the University of Michigan’s monthly survey of US consumer sentiment found that they had revised their two-year inflation expectations upwards to 3 .2% against 3.0% in April, the highest level for this indicator since 2011.
According to Brad Bechtel, of Jefferies, some of the operators who had bet heavily on the appreciation of the euro against the dollar withdrew, after data “a little softer than expected in the euro zone”.
Germany and Italy notably published, this week, industrial activity data significantly below expectations for March.
The idea is gaining ground that the European Central Bank (ECB) “will not be able to go as far (in terms of monetary tightening) as it thought”, explained the analyst.
For Brad Bechtel, the “greenback”, one of the nicknames of the dollar, also benefited from its status as a safe haven in a context of uncertainty around the American banking sector and the debt ceiling crisis, a movement against intuitive, because these two issues mainly threaten the United States.