Euro slips near $1.16 as hawkish Fed tone boosts dollar
The euro weakened to around $1.16 Friday, its lowest since August 19, as investors favored the US dollar after hawkish Federal Reserve Chair Kevin Warsh remarks.
The euro weakened to around $1.16 on Friday, touching its lowest level since August 19, as investors turned to the US dollar following hawkish remarks from Federal Reserve Chair Kevin Warsh, despite European data pointing to renewed inflationary pressures.
In his first major speech since becoming chair in May, Warsh reiterated that the Fed’s 2% inflation target is “firm and fixed,” while saying financial conditions are not currently restrictive and interest rates remain the Fed’s “predominant tool.” Meanwhile, inflation data from France and Spain strengthened expectations for further ECB tightening.
EU-harmonized inflation rose to 2.7% in France and 4.5% in Spain, the latter its highest since 2023.
Markets now see the ECB deposit rate rising to 2.80% by March next year from 2.25% currently, with roughly a 60% chance of a hike to 3%.
Recent ECB minutes and