Sun, Apr 30, 2017 - Page 14 News List

Inflation data prop up euro, US dollar jumps against yen

Reuters, NEW YORK

The euro on Friday rose against the US dollar after strong eurozone inflation figures, while the US dollar edged higher against the yen after US wages data suggested the US Federal Reserve would still hike interest rates two more times this year.

Official flash estimates put eurozone inflation at 1.9 percent in the first quarter of this year, on the verge of crossing over the European Central Bank’s (ECB) target of below, but close to 2 percent, and above estimates for a rise of 1.8 percent.

According to standard EU measures, in Italy it was 2 percent.

That helped drive the euro as high as US$1.0947, just below a five-and-a-half-month high of US$1.0950 struck earlier in the week.

The euro this week rose 2.3 percent against the US dollar from last week’s US$1.07.

Analysts said the latest inflation figures could prompt the ECB to take a more hawkish stance in its June statements by either upgrading its assessment of the European economy or suggesting less need for stimulus.

“There was a reminder this [Friday] morning that maybe inflationary pressures will be coming through and maybe the ECB will have to go away from its super-easy policy,” said Axel Merk, president and chief investment officer of Palo Alto, California-based Merk Investments.

In Taipei, the New Taiwan dollar on Friday fell NT$0.062 against the greenback to NT$30.218, but gained 0.5 percent from last week’s NT$30.363.

The US dollar on Friday rose as much as 0.4 percent against the yen to a session high of ¥111.71, just below a nearly four-week high of ¥111.77 touched on Wednesday, after US Labor Department data showed private wages and salaries accelerated 0.9 percent in the first quarter, marking the largest increase in 10 years.

The data suggested firming inflation and helped boost the US dollar even as the US Commerce Department said GDP increased at a 0.7 percent annual rate.

That was the weakest performance since the first quarter of 2014.

“The GDP data won’t alter the view that the Fed may raise rates in June and then ultimately again in September,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange Inc in Washington.

The US dollar index, which measures the greenback against a basket of six major rivals, was slightly lower on the day at 99.015, down 0.7 percent from last week’s 99.75.

For the month, the US dollar index fell about 1.3 percent to mark its second straight monthly drop.

The euro gained 2.3 percent for this month to mark its second straight monthly rise against the US dollar, while the US dollar ended the month little changed against the yen.

Additional reporting by CNA

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