Euro And US Dollar Await New Hints From Central Banks
The US dollar and euro remain steady today, as investors are expecting meeting of the Fed and ECB this week. The dollar index was almost unchanged at 93.58, while the single currency remained supported after assurances from Italy’s new government that it would not leave the European Union. The EUR/USD pair stayed at 1.1785 level.
The US central bank is expected to raise its interest rate from 1.75% to 2% on Wednesday. Markets also await the Fed's policy statement and fresh economic projections. The Fed has increased the range five times since December 2015.
The European Central Bank will hold its policy meeting on Thursday. Many analysts, as well as the ECB’s chief economist, have signaled that the ECB might be ready to announce Thursday it’s going to end its bond purchases when the $35 billion a month program expires after September. If the ECB decides to do this, it could give the euro a boost and put pressure on the US dollar.
The British pound has increased by 0.07% versus US dollar to 1.3389 after the latest data. The prospects for a rate hike by the Bank of England in the coming months have dropped after the latest UK jobs report showed that wage growth slowed last month.
The UK Office for National Statistics (ONS) reported, that unemployment rate remained unchanged at a 42-year low of 4.2% in April, in line with forecasts. Average earnings, excluding bonuses, rose by an annual 2.8% in the three months to April, from 2.9% previously. That was still higher than inflation which fell to a one-year low of 2.4% in April. Including bonuses, pay growth slowed to 2.5% from 2.6% previously.