Euro hits 1.05/$ again, highest since July!

Parity is a little off…

( — The euro returned to $1.05 this Thursday, its highest level since July! Apparently a long time ago when the single currency was trading below parity… it was between late September and late November. The single currency benefits from the weakness of the American currency After US inflation slowed more sharply than expected in October and the Fed announced its intentions to “slow down” interest rate hikes.

Indeed, Jerome Powell confirmed on Tuesday what many analysts have been expecting for weeks now amid the start of a slowdown in inflation across the Atlantic: “The US central bank may slow the pace of interest rate hikes.” The Federal Reserve said during a debate organized by the ‘Brookings Institution’ in Washington: “It would make sense to moderate the pace as it approaches the level that should be sufficient to reduce inflation” (…) Moderation of the interest rate increase could happen as early as the December meeting, he added…
It is difficult to be more clear, even if the fight against inflation is “far from over”, he emphasized… If Powell did not specify at what level he placed the “neutral exchange rate” (the famous “central rate”), he explained it this way. Fed officials said the output was likely to be higher than the 4.6% they forecast in last September.

Recall that the federal funds rate target was raised in early November to between 3.75% and 4%, which is the highest level since early 2008. Thus, the US central bank has raised the interest rate in the last six meetings, managing its fastest increase since the previous days. Paul Walker in the 1970s and 1980s

China loosens health restrictions

In addition, the news from China is also more attractive for international economic growth… Thus, under certain conditions, Beijing will allow quarantine periods to be spent at home rather than in special centers. Various relaxation measures are still to be announced in the coming days: Only some people who have tested positive for the coronavirus will be able to spend their isolation periods at home. This facility should be open especially to pregnant women, elderly and people suffering from other underlying diseases. People who are considered contacts will be allowed to self-isolate at home according to certain criteria.

Chinese authorities will also strengthen antigen tests and reduce the frequency of mass screening campaigns and the routine use of PCR tests …

Inflation indices are cooling

It should be recalled that last month the consumer price index in the United States increased by only 0.4%, contrary to the consensus of 0.6%. Excluding food and energy, CPI rose 0.3% from the previous month, against consensus of 0.5%. Annual inflation came in at 7.7% versus 7.9% consensus and 8.2% a month ago…

The leading indicator in Europe, producer prices in the Eurozone were published in October a sharper-than-expected drop in the month, mainly due to lower energy costsAccording to data released by Eurostat this Friday. Producer prices in the 19 countries that share the euro have decreased by 2.9% on a monthly basis, but have maintained a 30.8% increase over the course of a year. In September, they increased by 1.6% and 41.9%, respectively… Excluding energy, producer prices in October increased by 0.5% for a month and by 14% at an annual rate.

In terms of precise energy prices, Brent oil has had a particularly busy week, returning to the symbolic $80 a barrel in London last Tuesday, extending its loss for November by more than 16%. Spectacular inflation of Covid cases in China…

Despite the strong uncertainty about the consumption of black gold, remember that OPEC+ agreed last October to cut production by 100,000 barrels per day, despite the objections of several countries, including the United States, but did not agree to a reduction of 2 barrels from November. The next cartel meeting, the last one in 2022,scheduled for this Sunday, December 4 in Vienna. Suffice it to say, the pressure is likely to be intense on producing countries, particularly Saudi Arabia, which has been testing the market with rumors of a possible increase in output.

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