The EUR/USD pair is experiencing modest gains, hovering around the 1.1380 mark during the early hours of Thursday’s Asian session. Fed’s Warsh indicated that decisions regarding interest rates will be conducted in private sessions and dismissed the notion of providing forward guidance. Eurozone inflation moderated more than anticipated last month, thereby reducing the urgency for the ECB to implement another interest rate hike. The EUR/USD pair registers slight increases around 1.1380 in the early hours of the Asian session on Thursday. The US Dollar edges lower against the Euro on less hawkish remarks from Federal Reserve Chairman Kevin Warsh. Traders will pay keen attention to the US jobs data for June, which is set to be released later on Thursday.
Fed’s Warsh, speaking on Wednesday at the ECB Forum on Central Banking, refrained from providing any indication regarding the central bank’s potential actions at its July policy meeting, while acknowledging that inflation remains excessively high. He underscored the importance of maintaining central bank independence and reiterated the 2% inflation target. Warsh reiterated his preference for the central bank to reduce its bond portfolio, emphasising that any such action will only occur following thorough public preparation. “At a minimum, his comments provided no fuel for speculation on a near-term July rate hike, and in our view suggest the new Fed chair – while keeping all options open meeting by meeting – does not currently see cause for an immediate hike,” said Krishna Guha.
Conversely, indications of easing inflation within the Eurozone may lead traders to scale back their expectations regarding potential rate increases by the European Central Bank. This, in turn, could limit the potential appreciation of the shared currency. Eurozone inflation, as indicated by the Harmonised Index of Consumer Prices, decreased to 2.8% year-on-year in June, down from 3.2% in May, according to Eurostat’s report released on Wednesday. This figure arrived below the market expectation of 3.0%. Meanwhile, the core HICP inflation, which excludes volatile food and fuel prices, decelerated to 2.4% year-on-year in June, down from 2.6% in the prior reading, falling short of the market consensus of 2.6%.