Euro Gains on Dollar for Second Day
The euro pushed higher against the US dollar for a second day on Thursday (May 26) even as odds appeared to rise for a Federal Reserve rate hike in the next few months.
The euro’s gain remained modest. The common currency bought US$1.1194, up from US$1.1154 on Wednesday. The greenback also slipped to 109.76 yen from 110.21 yen.
The picture for higher US rates rose as better-than-expected data on the US industrial sector, home building and the jobs market combined with bullish comments from the Fed policymaker Jerome Powell.
Powell said in a speech that an increase in the federal funds rate would be appropriate “fairly soon,” if the data trend holds up.
That sentiment could get another boost on Friday if as expected the government revises upward its estimate of economic growth in the first quarter. The first estimate came in at a disappointing 0.5 per cent annual rate.
“Economic data has taken on even greater importance in the run-up to the next (Fed) meeting in mid-June,” said James Chen of Forex.com.
“In addition to next week’s non-farm payrolls employment numbers, tomorrow’s preliminary GDP (second release) will be critical in helping to fulfill (or not) the Fed’s criterion of improving economic data.”
Analysts are looking for an increase in the GDP estimate to 0.8-0.9 per cent, but Chen pointed out that in recent quarters the upward revisions have frequently outpaced expectations.
The British pound eased on Thursday after a steady climb that paralleled rising signs that the Brexit referendum in four weeks will support Britain remaining in the European Union.
On Wednesday, World Trade Organisation Director-General Roberto Azevedo became the latest international official to warn of the economic consequences of Brexit.
“It is very important, particularly with regard to trade, which is something very important for the British economy, that people have the facts and that they don’t underestimate the challenges,” he told the Financial Times. “Pretty much all of the UK’s trade (with the world) would somehow have to be negotiated.”
Courtesy : channelnewsasia.com
