Euro stable above 1.02 US dollars
On Friday, the euro was mostly stable above the $1.02 level. At noon, the price of the common currency was about the same as it was in the morning, at $1.0215. The euro lost some of its gains. Thursday afternoon, the European Central Bank (ECB) set the reference rate at $1.0122.
Before the weekend, there was a flood of economic data to look at in the euro zone. Most of the second-quarter growth numbers were much better than expected. In Germany, however, which has the largest economy in the euro area, the economy just stayed the same. With 0.7% growth in the last quarter, the whole currency area did much better than expected.
On the other hand, inflation data surprised in a bad way. In July, the inflation rate went up to 8.9%, which was higher than expected. At the same time, it’s a new high since the euro was introduced. Energy prices went down a little bit, but the prices of food and other goods and services went up more than they did the month before. The ECB has already raised its key interest rates by a lot, but it is clear that it is not doing as much as other central banks to fight inflation.
In the US, the US Federal Reserve’s preferred inflation measure, PCE, is expected in the afternoon. This week, the Federal Reserve raised interest rates sharply as part of its fight against high inflation. More interest rate hikes are likely, but they might not be as big as was thought before because the domestic economy is weakening. On Thursday, it was announced that the world’s biggest economy had fallen into a technical recession, which means that economic output has been going down for two consecutive quarters.