On Friday, euro to dollar exchange rate levelled out to 0.04% after the US Federal Reserve’s hawkish wing urged for early tapering bond purchases ahead of the awaited speech of Fed Chair Jerome Powell.
The risk-off mood persisted in the market as mixed Eurozone economic data halted the recent gains of the Euro against the USD.
The single currency is still ahead of the greenback, while Eurozone states gradually recover from their significant loss in the wake of the pandemic.
EUR/USD is currently traded at $1.1755, having eased from yesterday’s high of $1.1779.
Eurozone inflation in August led to a 2.7% year-on-year market expectations, which is above the July data of 2.2% and far from the European Central Bank’s 2% estimate.
However, the stated data will not significantly impact bank’s stance that price pressures are transitory and economic stimulus could persist in the following months.
Germany, the region’s leading economy, reported signals of downbeat business and low consumer morale data due to the growing concerns on the impact of coronavirus infections and supply chain problems.
On Thursday, the German’s Institute for Economic Research reported that the business climate indicator plummeted below the estimates. The supply bottlenecks and rising prices of goods resulted in a data of 99.4 low from the 100.4 forecasts.
Other European countries also suffer conflict in cross-country transportation as the shortage of truck drivers ignited a supply chain crisis.
Traders expect that the ECB’s persistent dovish approach could cap EUR gains.
The inverse relationship of the euro and US dollar will strengthen the single currency as the Greenback experiences a slowdown.
USD faces headwinds caused by the rapid spread of the highly infectious Delta variant and tapering anticipation.
The dollar index declined 0.02% to $93.03, virtually unchanged from the previous day of $93.05.
Federal Reserve System Plans on Tapering
Investors eye the plans of the Federal Reserve System on asset tapering and bond buying as the US dollar firms in the global exchange.
Dallas Fed President Robert Kaplan believed that the Fed’ could announce to start its tapering plans in October, while St. Louis Fed President James Bullard mentioned that the Fed is consolidating on reducing $120 billion in monthly bond purchases.
Analysts have a rough consensus that Fed Chair Powell may announce tapering in the fourth quarter.
Meanwhile, the Australian dollar edged up 0.08% to 0.7240, ahead of the country’s retail sales data.
The Canadian dollar also jumped 0.03% to 1.2685, while the pound sterling inched up 0.01% to 1.37.
New Zealand dollar fell 0.04% to 0.6945 as the Japanese yen plummeted 0.16% to 109.90.