Around 9:40 p.m., the single currency dropped 0.60% to the greenback, at 1.0603 dollars for one euro. The currency common to 20 European countries has also fallen below parity with the franc.
The euro retreated Thursday against several major currencies, in a market digesting recent surprise inflation indicators and calmed by the stabilization of European bond rates, after a recent surge.
Around 8:40 p.m. GMT, the single currency dropped 0.60% to the greenback, at 1.0603 dollars for one euro. The currency common to 20 European countries has also fallen below parity with the franc.
Currency traders paid little attention to the inflation figure in the euro zone, which nevertheless came out at a higher level than expected in February, for its “underlying” part, that is to say excluding energy and food, at 5.6% over one year against 5.3% expected.
“He was already integrated, given what we had seen in recent days country by country, especially in Germany,” explained Brad Bechtel, of Jefferies.
Besides Germany, inflation came in above forecasts in France and Spain earlier this week.
After rising to 3.26% earlier Thursday, a more than 14-year high, the yield on German 2-year government bonds eased to 3.21%. “German rates rose very quickly, very high,” recalls Brad Bechtel, for whom “they went too far.”
“I do not know if they still have a lot of room for appreciation before we receive new macroeconomic data,” argued the analyst.
By contrast, “US short rates continue to climb, but it’s a slower process”, still at work, “which takes the dollar with it”, according to Brad Bechtel.
The yield on 2-year US government bonds, more representative of market expectations in terms of monetary policy than the 10-year rate, stood at 4.89% on Thursday, against 4.87% the day before closing.
Earlier it had reached 4.94%, a first since July 2007.
High rates attract investors, who put their money in the currency of the country concerned, which leads to an appreciation of this currency.
Moreover, according to Joe Manimbo, of Convera, the euro suffered somewhat from the publication of the unemployment figure in the euro zone, at 6.7% in January, ie above the 6.6% announced by economists.