(Updates throughout)By Joice AlvesLONDON, Nov 15 (Reuters) - The euro, in demand as asafe-haven currency, touched a May 2020 low against the
(Updates throughout)
By Joice Alves
LONDON, Nov 15 (Reuters) – The euro, in demand as a
safe-haven currency, touched a May 2020 low against the Swiss
franc on Monday, and the dollar hovered around a 16-month high
as U.S. inflation raised bets on a Federal Reserve interest rate
hike.
With inflation fears rising and concerns over the COVID-19
pandemic pressuring global economic growth, the Swiss franc
hit 1.0530 against the euro overnight, its highest
level versus the single currency in 18 months. It was up 0.1% at
1.0535 at 1210 GMT.
Interest for the euro/Swiss franc cross has grown sharply,
said Simon Harvey, senior FX market analyst at Monex Europe,
“because the Swiss franc is a natural hedge against inflation.”
Supply-chain bottlenecks and soaring energy costs are
slowing euro zone growth and will keep inflation high for even
longer than had been thought, European Central Bank President
Christine Lagarde told a hearing of the European Parliament’s
committee on economic affairs on Monday. She said euro zone
inflation would ease next year.
Swiss National Bank governing board member Andrea Maechler
said modest Swiss inflation, at an annual rate of around 1.2%,
was capping the franc’s rise. But she reiterated the SNB’s
commitment to currency market interventions designed to limit,
if needed, the effect that the Swiss franc’s strength has on
Switzerland’s export-orientated economy.
Another safe haven, the U.S. dollar, was not far from a
16-month high it touched on Friday after data showing a sharp
jump in U.S. consumer prices last month encouraged markets to
price a first Fed rate increase by July next year.
The dollar index – which measures the currency
against six peers – edged 0.1% lower at 95.038 as traders
awaited clues on the Fed’s interest rate hike plans.
Investors will be watching any comments at a virtual summit
between President Joe Biden and Chinese leader Xi Jinping on
Monday.
Gains in the heavily euro-weighted dollar index have also
been helped by a droop in the single currency, with ECB’s
Lagarde continuing to push back on market bets for tighter
policy.
Lagarde “reiterating the dovish outlook of policy makers”
kept the euro on check, said Jane Foley, Head of FX Strategy at
Rabobank London.
The euro edged 0.1% higher at $1.1452, not far
from Friday’s 16-month low.
In Britain, the pound rose 0.2% to $1.3436, ahead
of a data-heavy week with employment, inflation and retail sales
numbers expected to provide clues about whether the Bank of
England will raise rates in December, as expected by markets
. On Friday, sterling touched its lowest level this
year versus the dollar.
(Reporting by Joice Alves, Kevin Buckland; Editing by Simon
Cameron-Moore, Nick Macfie and Timothy Heritage)
www.lse.co.uk