Euro Falters Despite Weak US Data as Hawkish Fed Remains in Control
The Euro struggled to attract buyers on Tuesday despite below-forecast US economic data, as the US Dollar showed little weakness following the release. The EUR/USD pair trades around 1.1601 after touching an intraday low of 1.1587, but remains down roughly 0.14% on the day.
The ISM Manufacturing Purchasing Managers Index (PMI) fell to 54.6 in August from 55.6 in July, missing the market forecast of 55.2. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, retreats toward 99.55 after reaching an intraday high of 99.65.
Fed Governor Michael Barr said that 'the persistence of inflation above target creates risks.' He added that he favours steady rates if confident inflation is moderating but warned that 'if inflation doesn’t moderate soon, it will be time for an interest rate hike.'
The European Central Bank (ECB) is widely expected to raise interest rates this month, following data released earlier in the day showing that the Eurozone Harmonized Index of Consumer Prices (HICP) rose 0.4% MoM in August.