Title: Euro set for best monthly gain in a year ahead of inflation data
May 31, 2022 03:10AM ET
On Tuesday, the euro fell but was set to have its best month in a year ahead of the release of inflation data that will raise expectations of an interest rate hike by the European Central Bank.
German consumer prices rose 8.7% and Spanish inflation rates resumed their upward march, paving the way for new record aggregate eurozone inflation data for May, with a Reuters poll predicting a 7.7% figure.
As the European Union moves closer to cutting Russian oil imports by 90% by the end of this year, the inflation demon is unlikely to be tamed any time soon, even if markets expect an aggressive 115 basis point rate hike in the final six months of 2022.
The euro settled at $1.0737, down 0.4%, after hitting a five-week high of $1.0786 overnight. The single currency is expected to gain 2.2% in May, which would be the biggest monthly gain in a year.
Gains in the euro overnight supported the dollar, which also benefited from a rise in US Treasury yields.
The dollar index stood at 101.71, after falling overnight to a five-week low of 101.29.
The Canadian dollar touched 1.2653 to the dollar, close to last month's overnight high, ahead of Wednesday's Bank of Canada meeting, at which all 30 economists polled by Reuters expect an interest rate hike of 50 basis points to 1.50%.
Bitcoin was leading at around $31,600, after surpassing the $32,000 threshold overnight for the first time in more than three weeks.