In the Asian session on Wednesday (May 34), EUR/USD first fell and then rose, temporarily reporting 1.0773, an increase of 0.03%. Although the euro zone economy is not satisfactory, but the European Central Bank is expected to raise interest rates is expected to give some support to the euro.
HSBC expects the ECB to hike rates in June, July and September. Senior Economist Chris Hare said the euro zone PMI data showed a decent pace of expansion, but perhaps the most interesting aspect of the data was how to interpret the rise in the output price index for services amid a fall in the input price measure. It might be tempting to point the finger at strong demand for services as fueling “greed inflation“, in which companies aggressively raise prices even as growth in input costs slows. Still, record high input prices mean core inflation will remain sticky, prompting HSBC to now expect ECB rate hikes in June, July and September.
