The euro rate rises above parity again
The rate of the euro rose above parity on Friday. In the afternoon, the value of the common currency went up as high as 1.0090 US dollars. It was last traded at 1.0062 US dollars, which is a bit less. It was still about a cent less in the morning. The reference rate was set by the European Central Bank (ECB) at 1.0007 dollars (Thursday: 0.9970 dollars). So, 1 euro was equal to 0.9993 dollars.
Jerome Powell, the head of the US Federal Reserve, has made it clear that the central bank will keep taking strong steps to fight high inflation. Powell talked about the recent drop in inflation in the US in a speech at a central bank conference in Jackson Hole, USA. But he also told us that “we need to see more.” He said again that the 2 percent inflation goal is the “most important” goal of US monetary policy.
Jerome Powell comments
Powell’s comments point to more big increases in interest rates, which would only have a short-term effect on the foreign exchange market. Instead, the euro got a boost from economic data from the US that was worse than expected. Consumer spending and personal income of US citizens barely went up in July. Also, a price index based on consumer spending only went up by 6.3% from one year to the next. The rate of growth was still 6.8 percent the month before. The US Federal Reserve bases its monetary policy on the price indicator PCE, which is lower than the general inflation rate of 8.5% in July.
The ECB set the reference rates for one euro at 0.84590 (0.84293) British pounds, 137.02 (136.07) Japanese yen, and 0.9642 (0.9616) Swiss francs in relation to other important currencies. This afternoon in London, one troy ounce of gold was worth $1,749. That was about ten dollars less than the day before.