NEW YORK, Sept 12 (Askume) – The dollar fell against the euro on Thursday after European Central Bank President Christine Lagarde lowered expectations for a rate cut next month and said the bank would take its next policy step based on economic data.
The European Central Bank cut interest rates again by 25 basis points on Thursday due to slowing inflation and economic growth, Lagarde“We will take decisions meeting by meeting,” he said at a press conference .
“I’m not going to give you any kind of commitment as far as that specific date is concerned, our path is not predetermined at all.”
As widely expected, the European Central Bank reduced its deposit rate to 3.5%. However, in a long-term technical correction, the refinancing rate was reduced by 60 basis points to 3.65%.
Just before Lagarde’s speech, interest rate futures had lowered expectations for an October rate cut from 10 basis points to just 7 basis points, according to calculations by the London Stock Exchange Group.
Yale Selfen, chief economist at KPMG in the UK, said: “Looking ahead, there is still uncertainty about the direction of interest rates.”
“Although the Governing Council generally agrees that policy restrictions should be eased, views are divided on the pace of reductions.”
He expects deposit rates to ease further in December and drop to 3.25%. If the outlook for the euro zone weakens further, Selfen believes ECB policymakers will accelerate interest rate cuts next year and eventually raise interest rates to around 2.25%.
The euro was last up 0.3% at $1.1039 but is down 0.5% so far this week.
EUR/JPY rose 0.4% to 157.38.
In the United States, the dollar index fell 0.2% to 101.58, weighed by gains in the euro, the index’s biggest component.
USD/JPY is up 0.2% so far this week and was last steady at 142.41.
Mixed US economic data released on Thursday strengthened expectations that the Federal Reserve will cut interest rates by 25 basis points next week.
Data showed that in the week ended September 7, the number of Americans filing initial claims for unemployment benefits rose by 2,000 to a seasonally adjusted 230,000, in line with expectations .
In August, US producer prices rose 0.2% due to rising service costs, slightly more than expected, but the trend is in line with falling inflation. July’s data was revised to show that the producer price index was unchanged from the 0.1% increase previously announced.
Economists polled by Askume had forecast the PPI rising 0.1%.
“Stable producer prices should encourage investment and in turn boost the economy,” said Scott Helfstein, head of investment strategy at Global.
The US interest rate futures market sees only a 13% chance of a 50 basis point cut this month, down from a high of 50% after Friday’s mixed US non-farm payrolls report.
In 2024, interest rate futures expect a decline of 105 basis points, down from about 113 basis points earlier this week.
Bank of Japan board member Naoki Tamura, considered a sharpshooter on policy issues, said on Thursday he expects the BOJ to raise interest rates by at least 1% in the second half of the next fiscal year, but he also said he would continue to raise interest rates. , raising interest rates in stages.
On Wednesday, Junko Nakagawa, another BOJ board member, emphasised the central bank’s accommodative stance, saying low real interest rates left room for further rate hikes.
The comments boosted the yen, which has gained 2.6% against the dollar so far this year.
In other currencies, the pound rose 0.3% against the dollar to $1.3083, its lowest since Aug. 20 after falling to $1.30025 in the previous session.
