Euro Rises As Lagarde Fails To Devalue Currency
The euro climbed against its major opponents in the European session on Friday, as European Central Bank President Christine Lagarde’s optimistic assessment on Eurozone economy and soft approach to the currency’s strength caused a spike in the common currency.
Lagarde said on Thursday that the ECB would “carefully” monitor the exchange rate, but it is not a monetary policy tool.
“Our mandate is price stability, and clearly to the extent that appreciation of the euro exercises negative pressure on prices, we have to monitor carefully such a matter,” Lagarde added.
But ECB chief economist Philip Lane and French central bank chief Francois Villeroy de Galhau expressed dissatisfaction with the rising rate on Friday.
Lane said that inflation remained far below the target and and there was only partial progress in combating the negative impact of the pandemic on projected inflation dynamics.
Data from Destatis showed that German consumer prices were unchanged in August after a modest decline in July.
The consumer price index was unchanged on a year-on-year basis, after a 0.1 percent fall in July. Compared to the previous month, the index decreased 0.1 percent.
Separate data showed that the wholesale prices decreased 2.2 percent annually in August after a 2.6 percent drop in July. Prices fell 0.4 percent from the previous month.
The euro edged up to 1.1869 against the greenback, 126.08 against the yen and 1.0783 against the franc, after falling to 1.1810, 125.31 and 1.0755, respectively in early deals. The currency may find resistance around 1.20 against the greenback, 127.5 against the yen and 1.10 against the franc.
The euro rallied to 0.9292 against the pound, its highest level since March 23. On the upside, 0.94 is possibly seen as the next resistance for the euro.
Data from Office for National Statistics showed that the UK economy expanded for the third straight month in July as lockdown measures continued to ease.
Gross domestic product expanded 6.6 percent in July from June, when it gained 8.7 percent. GDP was forecast to climb 6.7 percent.
The European currency touched 1.5637 against the loonie, up from a low of 1.5568 seen at 5:00 pm ET. The euro is likely to find resistance around the 1.58 region.
In contrast, the euro dropped to 1.7721 against the kiwi and 1.6234 against the aussie, from yesterday’s closing values of 1.7757 and 1.6275, respectively. If the euro slides further, it may find support around 1.74 against the kiwi and 1.58 against the aussie.
Looking ahead, U.S. CPI and monthly budget statement for August are set for release in the New York session.