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17/06/24
196
EUR Flat After Market Jitters Decline
On Monday, the euro was flat and EUR/USD traded at about 1.0714, up 0.10% for the day in the North American session.
Late last week, France’s financial markets tumbled, as investors were nervous about the snap parliamentary election at the end of this month. There are worries that the extreme right may make strong gains, as has happened in the recent elections for the European Union parliamentary.
This turmoil resulted in a sell-off in France’s financial markets and the euro lost 1% over Thursday and Friday.
On Monday Philip Lane, the ECB’s Chief Economist attempted to reassure jittery investors and said the ECB wouldn’t intervene as the market turmoil wasn’t disorderly. Lane added the ECB was confident that inflation would drop to the 2% target next year.
Although Lane may have been optimistic, the ECB couldn’t have been happy with the CPI release for June, which indicated in the preliminary estimate that inflation was accelerating.
Headline CPI rose to 2.6% in June from May’s 2.4% and the core rate rose to 2.9%, up from May’s 2.7%. The final estimate will be released on Tuesday and is expected to be the same as the initial release. Markets expect 1 or 2 rate cuts before the end of 2024.
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