In the last period, the euro rate has been performing well. We can see the results by checking the EUR/USD and EUR/JPY rates. It has had a very successful rally over 3 days since Friday, mainly against the dollar. This was after two months of disappointing performance in the markets.
When it comes to the yen, the euro’s performance has been even more phenomenal. The euro to yen rate has reached its highest point since 2008 this Tuesday, a high point for the euro. The reason for this disparity may have its roots in the difference between Japanese and EU monetary policy, which may finally be paying off.
If we were to compare 100 euro to dollar, the number we get is 109. When comparing the dollar and the yen, we get an even more complete picture. The USD/JPY has been especially high, being at its highest peak in 10 months. So, it seems like the Japanese yen has been weak in multiple areas. The Bank of Japan is reportedly making no moves to rectify this situation so far.
What Could Further Influence the Euro Rate?
There is still concern regarding inflation in European circles. The president of the ECB had raised her concerns about inflation at a recent symposium without any concrete plans on how to act on it in the future. She said that interest rates needed to remain around their current rate, quite high, to temper inflation. Once inflation was down, then they could make any necessary moves affecting the euro rate.
Analysts are now waiting for consumer data in Europe, with a CPI for the whole of Europe coming soon. Economists seem to believe that a figure of 5.1% is likely, on average, to differ from the previous 5.3%. The CPI data for Spain and Germany has already given some indications that the European CPI may be higher than the expectations. This could lead to volatility in the euro as traders will be unsure as to what the future would hold.
Later today, the market will get the latest Euro-wide CPI read with a Bloomberg survey of economists estimating the headline number to be 5.1% year-on-year against 5.3% prior. The core CPI forecast is looking at 5.3%, below the previous 5.5%.
Yesterday saw Spanish and German CPI come in touch higher than anticipated, and a notable miss in expectations may lead to volatility in the euro rate.