ECB’s Holzmann: Interest rates will be increased further

The European Central Bank’s Robert Holzmann has crossed the wires saying interest rates will be increased further.

The EUR/USD pair is climbing in the US trading session, though it remains beneath the highs of the day at 1.0481, reached on the release of a softer-than-expected US Producer Price Index (PPI). PPI and CPI report in the US, flashing signs that inflation is cooling down, added to Fed’s policymakers laying the ground for a slower pace of rate hikes, spurred a risk-on impulse. At the time of writing, the EUR/USD is trading at 1.0364.

Global equities continue to rally, between 0.70% and 2.10%. The US Department of Labor (DoL) reported that PPI for October rose by 8% YoY, below 8.3%, while excluding volatile items, the so-called core PPI jumped by 6.7% YoY, less than 7.1% foreseen.

CPI and the PPI reports are in the rearview mirror, suggesting that US inflation is cooling, Federal Reserve (Fed) policymakers are lying the ground to decrease the size of rate hikes from 75 bps to 50. Therefore, US Dollar (USD) weakened on the release, as shown by the EURUSD spiking towards a new 5-month high at 1.0481, piercing on its way north of the 200-day Exponential Moving Average (EMA) at 1.0427, before retreating to the current exchange rates.