The shared currency erased its earlier slide versus the dollar after data showed inflation accelerated this month in four out of the six German states to report figures. The euro was also buoyed after the Federal Reserve said Wednesday that officials are “closely monitoring” developments from China to Europe, prompting speculation a dollar-boosting March interest-rate increase is unlikely.
“There was some short covering in the euro after the inflation data,” said Neil Jones, London-based head of hedge-fund sales at Mizuho Bank Ltd., referring to closing bets the currency would fall. “The numbers are mostly better than expected. The euro was also supported as I sense the market has largely pushed out a March rate hike” by the Fed, he said.
The German inflation data are a chink of light in a continent that’s struggling to stoke consumer prices and boost the economy. European Central Bank President Mario Draghi said last week policy makers will reassess their monetary stimulus program at the March 10 meeting as tumbling oil prices threaten to put further downward pressure on inflation. Investors are now awaiting a Germany-wide report which economists predict will show the annual inflation rate rose to 0.4 percent, from 0.3 percent in December.
The euro climbed as much as 0.3 percent versus the dollar and was up 0.1 percent at $1.0904 at 10:55 a.m. London time. That leaves it 0.4 percent stronger this month, extending December’s 2.8 percent advance. The shared currency gained 0.2 percent to 129.59 yen, still down 0.8 percent since the start of the year.
By: Anchalee Worrachate.
Review: Emerging Market Formulations & Research Unit, Flagship Records.
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